Pakistan’s factories barely grew in October, according to a closely watched monthly survey of manufacturers. The HBL Pakistan Manufacturing Purchasing Managers’ Index, compiled by S&P Global, edged down to 50.8 in October from 50.9 in September, its lowest level in six months.
A Purchasing Managers’ Index, or PMI, is a monthly survey that asks factory managers whether business is getting better or worse. A reading above 50 means conditions are improving, while a reading below 50 means they are getting worse. At 50.8, manufacturing is still growing, but only just — the improvement is marginal, which means very small.
Costs are rising faster than ever in the survey’s history
The main problem is cost. The survey found that input price inflation — the rate at which the prices of raw materials and other inputs rise — hit its highest level since data collection began in May 2024. Factory managers pointed mainly to higher prices for fuel and fabrics. When fuel becomes more expensive, it raises the cost of running machines and transporting goods, and those higher costs feed through to almost everything a factory makes.
That cost pressure is now weighing on demand. New export orders fell for the first time in six months, and recorded their sharpest fall in over a year, as higher prices and regional disruptions hurt orders from abroad. Employment also declined for the first time since May, as firms tried to contain costs. Business confidence softened to a three-month low, with inflation worries and higher raw material costs weighing on expectations.
Why this matters beyond the factory gate
Manufacturing matters to ordinary households even if nobody in the family works in a factory. When factories face record input costs, they may raise prices, slow hiring, or cut back production — and all three eventually reach shoppers and jobseekers. Weaker export orders also matter for the whole economy, because exports bring in foreign currency that helps pay for imports such as fuel and machinery.
There is one piece of context that helps explain the cautious mood. The State Bank of Pakistan raised its policy interest rate by 50 basis points to 12 percent in late October. The policy rate is the rate at which the central bank lends to banks, and it influences borrowing costs across the economy. Higher borrowing costs make it more expensive for firms to expand, which is one reason analysts described the rate rise as a careful balancing act between supporting activity and controlling inflation.
What this means
For an ordinary reader, October’s survey is a warning light, not a crisis signal. Factories are not shrinking — the reading is still above 50 — but growth has slowed to a crawl while costs are rising at a record pace in this survey’s short history. The next test is whether November brings relief on fuel and raw material prices, or whether export orders keep falling and job losses spread. Until costs ease, shoppers should expect price pressure to continue, and workers in manufacturing should watch hiring closely. This article is information only, not a recommendation to buy or sell any share.
Sources: Business Recorder, Profit by Pakistan Today. Written in our own words for information only — not investment advice.