MCB PMI stands at 65.69 for July

LAHORE: The MCB Purchasing Managers Index (PMI) at 65.69 for the month of July indicates a moderately increased pace of growth in the manufacturing sector, relative to May 2015, as is evident by an increase of 0.55 points in the MCB PMI reading.
The risks to the manufacturing sector in Pakistan appear to have nearly balanced out. Although structural bottlenecks such as energy shortages continue to impede the performance of the manufacturing sector, the results of the 10th MCB PMI portray promising prospects of performance for the manufacturing sector. Low domestic inflation has facilitated access to cheaper raw materials in the local market and the declining financial costs are expected to contribute significantly to low mark-up costs and increased profits.
As a rule of thumb, a reading above 50 is taken as expansion in the manufacturing sector and economy, while a persistent reading below 42 is taken as an indicator of contraction in the overall economy and a precursor to impending recession.
New orders stood at 76.9, an increase of 0.8 points since May 2015. Conversely, however, production levels remained stable at 70.6. Lags and inefficiencies in the supply chain on account of floods in the north and south of Pakistan may have contributed to the increase in the index monitoring delivery time, which increased to 52.8 from 51.7 in May.
Additionally, the increase in supplier delivery time could have restrained the possibility of increasing production, in spite of an increase in new orders and a marginal uptick in employment in July.