Karachi: The HBL Pakistan Manufacturing Purchasing Managers’ Index (PMI), compiled by Sand P Global, rose to 52.8 in December, up from 52.3 in November, achieving its highest level since February. The increase signals a solid rise in production and stronger demand, with new orders accelerating at their fastest pace since March. Respondents attributed the growth to business expansion and improved product quality.

According to Habib Bank Limited, new export orders reported growth for the first time in six months, which businesses linked to stronger international demand and better product quality. Despite the increase in output, capacity pressures were subdued as work backlogs decreased significantly. Employment levels rose for the second consecutive month, with firms citing greater workloads and extended hours in anticipation of stronger order inflows. Input purchases also increased, as manufacturers stockpiled to guard against potential price hikes, leading to the steepest rise in raw material inventories since the survey began.

Humaira Qamar, Head of Equities and Research at HBL, noted on the latest release, “Business confidence strengthened to its highest level since July, supported by expectations of improved economic and inflationary conditions.” This sentiment was echoed by the State Bank’s recent monetary policy decision, which included a 50 basis point rate cut, indicating confidence in inflation averaging within the 5-7% range and meeting its June 2026 foreign exchange reserve target.

The PMI, derived from monthly surveys of private sector firms, tracks changes in output, new orders, employment, and inventories. For investors and analysts, it acts as a leading indicator of economic momentum and turning points in the business cycle, often preceding changes in official GDP data.