Pakistan Purchasing Managers Index (PMI) Points to Growth in Manufacturing
Pakistan Purchasing Managers Index (PMI), jointly launched by Habib Bank (HBL) and S&P Global, is showing sustained growth in manufacturing for the last several months. It has been consistently above 50, indicating expansion. This indicator disagrees with contraction reported by Pakistan Bureau and Statistics (PBS) Large Scale Manufacturing (LSM) indicator. What accounts for this discrepancy? Is it because the LSM tracks only a subset of industries tracked by PMI? Is there a difference in methodology?
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| Pakistan PMI Trend. Source: S&P Global |
Here's one plausible explanation offered by analyst Humaira Qamar at HBL: "As per the Pakistan Bureau of Statistics, Large scale manufacturing (LSM) contracted 1.8% in the latter half of 2024. However, excluding the hefty decline in the low-weight furniture segment, LSM trended positively. Our PMI release suggests that the recovery has extended into 2025, with demand-side conditions taking cue from a sharp reduction in the policy rate".
Another possible explanation for the discrepancy between PMI and LSM can be seen in the fact that power generation for the grid, a key component of the LSM indicator, is in constant and substantial decline. However, the power generation data tracked by PBS excludes rapidly rising solar electricity production by consumers, including industrial consumers in the country. Pakistan's grid-connected electricity production and electricity consumption are given as around 110 TWh for 2024, but appear to be declining compared to 2023, which contradicts expectations of increasing demand, but could be a sign of the massive expansion of solar energy, according to an article in PV magazine titled ‘The Solar Blitz’: How crisis-ridden Pakistan is leading the world on the ‘Solar March’. Based on rather imprecise Chinese solar panel export figures and extensive satellite imagery, Bloomberg energy analyst Jenny Chase has concluded that rapid solar expansion in Pakistan is real.
In August 2024, Chase tweeted as follows: "Pakistan's energy regulator, NEPRA, notes that power consumption is down 9.1% year on year in 2023. NEPRA attributes the drop mainly to high power prices cutting economic activity and making residential consumers curb consumption, with rooftop solar only a third factor. But NEPRA doesn't know how much solar the country has, either. We think it has about 12.7GW of solar already (compared with 50GW on-grid power capacity) and will add 10-15GW of solar in 2024".
In addition to the decline in grid power generation, the reported drag in LSM growth is primarily due to a few low-weight sub-sectors, which have more than offset positive momentum in key sub-sectors such as textiles, pharmaceuticals, automobiles, and POL (petroleum, oils and lubricants), according to the State Bank of Pakistan, as reported by the Express Tribune.
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| Pakistan Manufacturing Orders, Output and Employment. Source: S&P Global |
High-frequency data like monthly PMI help in gauging real time economic activity in terms of orders, output and employment in the manufacturing sector. Here's an excerpt of the HBL/S&P Global PMI report for February 2025 published in March:
Manufacturers in Pakistan also responded to strengthened operating conditions by raising their staffing levels in February, marking the second increase in as many months. Several firms commented that they required additional capacity in response to higher production requirements, while others mentioned longer operating hours. Increased capacity allowed firms to stay on top of outstanding business in February, as indicated by a sustained and steeper fall in backlogs of work. The latest depletion was the most pronounced in five months. Finally, companies expressed confidence in the future path for output during February, with optimism remaining marked overall. This optimism was underpinned by hopes for further new product launches and improvements in product quality, alongside expectations of softer price pressures.
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https://news.bitcoin.com/report-pakistan-to-unveil-crypto-friendly-electricity-tariffs-to-lure-miners/
Pakistan is reportedly planning to develop a specialized electricity tariff regime for crypto mining and blockchain-based data centers.
In a significant move, Pakistan is reportedly developing specialized electricity tariffs to attract crypto mining and blockchain-based data centers, further loosening its past stance on cryptocurrencies. This initiative aims to capitalize on the country’s surplus power capacity, transforming a potential liability into a valuable asset while fostering growth in the burgeoning digital asset industry.
According to a Dawn report citing sources in Pakistan’s power ministry, extensive consultations are underway with stakeholders to formulate an attractive electricity tariff structure for emerging industries. This development follows a series of high-level discussions, including a recent meeting between Power Minister Awais Leghari and Bilal Bin Saqib, CEO of the newly formed Pakistan Crypto Council (PCC).
As reported by Bitcoin.com News, the PCC was launched with the mandate of integrating blockchain and digital assets into the financial system. The PCC’s inaugural meeting on March 21, presided over by Finance Minister Muhammad Aurangzeb, further solidified the government’s interest in exploring the crypto space.
At this meeting, Saqib presented a vision for utilizing Pakistan’s surplus electricity for bitcoin mining, drawing significant attention from attendees, including State Bank Governor Jameel Ahmad and the Securities and Exchange Commission of Pakistan Chairman Akif Saeed.
In remarks commending the PCC’s first meeting, the Pakistani Finance Minister said, “This is the beginning of a new digital chapter for our economy. We are committed to building a transparent, future-ready financial ecosystem that attracts investment, empowers our youth, and puts Pakistan on the global map as a leader in emerging technologies.”
The PCC-sponsored initiative highlights the shift in Pakistan’s approach to cryptocurrencies. Previously, Pakistan regulators, including the State Bank of Pakistan (SBP), warned against the use of cryptocurrencies, citing concerns about money laundering and financial instability. In 2023, the SBP and the Information Ministry considered banning cryptocurrencies altogether.
The government has since recognized the potential of blockchain technology and digital assets, leading to its latest attempt to attract miners.
https://www.reuters.com/world/asia-pacific/pakistan-cut-power-tariff-by-741-rupees-per-unit-home-consumers-2025-04-03/
ISLAMABAD, April 3 (Reuters) - Pakistan will cut power prices for domestic and industrial users, Prime Minister Shehbaz Sharif said on Thursday, in a sign of the economy's recovery from the brink of default.
The International Monetary Fund stepped in to stabilise the Asian country's finances with a standby arrangement in 2023 and then a $7 billion bailout last year.
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Lower power prices will be a relief to Pakistanis after several increases in the past couple of years.
Pakistan's $350 billion economy has been struggling since inflation rose to record high of 38.50% in May 2023, with growth turning negative, reserves shrinking to barely a couple of weeks of controlled imports, and interest rates jumping to 22%.
"We have successfully brought the inflation down to single digit," Sharif said, adding that the nearly 10-percentage-point reduction in the country's main interest rate in the last year would help businesses grow.
The tariff will be cut by an average 7.41 rupees ($0.0264) per kilowatt-hour to 34.47 rupees for domestic users, and by an average 7.59 rupees per kilowatt-hour to 40.60 rupees for industrial users, Sharif said.
https://www.thenews.com.pk/print/1297635-pakistan-manufacturing-growth-eases-in-march
KARACHI: The HBL Pakistan Manufacturing PMI, compiled by S&P Global, posted a reading of 52.7 in March, down from 54 in the previous month, a statement said on Thursday.A figure above 50 denotes an expansion in activity and below it signifies a contraction.
Humaira Qamar – Head of Equities & Research stated “This was the lowest reading since September 24 but remained within the expansion territory. The pace of expansion slowed due to a softer rise in New Orders and Manufacturing Output. New orders and output grew at a slower rate but remained robust, flashing early signs of demand resilience in the economy”
The latest expansion in new orders is driven not only by a recovery in domestic demand but also by rising foreign demand for Pakistani goods. New export orders expanded for the seventh consecutive month and firms credited this to improved quality standards.
Qamar pointed out that the recent dip in goods exports is not concerning. “The recent broad-based decline in goods exports observed in February appears transitory and this was most likely attributable to the fewer number of days during the month.”
The March PMI release comes a week after the latest GDP statistics from PBS. The core advantage of the PMI is its ability to provide up-to-date, accurate and often unique monthly indicators of economic trends while GDP is quarterly and typically lags by a period of 3-5 months.
She acknowledged that GDP growth remains on the weaker side but there are early signs of growth returning and the sector’s outlook remains positive. Her optimism is shared by the survey participants.
“Despite weaker hard data, with PBS recently reporting a 0.2 per cent contraction in industrial activity during October-December 2024, the sectors outlook remains positive. The confidence of survey participants was associated with expectations of easing price pressures as well as accommodative economic and taxation policies.”
@ArifHabibLtd
Textile exports increased by 10% YoY to USD 1.4bn in Mar'25
Textile exports increased by 10% YoY | 1% MoM to USD 1.4bn in Mar'25. For 9MFY25, exports rose by 9.4% compared to the previous year, reaching USD 13.6bn.
https://x.com/ArifHabibLtd/status/1912831835828109746