LAHORE: The manufacturing sector has increased 4.12 percent on a year-on-year basis in Jul-January of 2015-16, however, it registered a value of 63.44 in March as compared to January’s reading of 64.54.
According to the MCB Bank Purchasing Managers Index (PMI) survey, a reading of 50 or above indicates that manufacturing activity and the overall economy expanded.
“An accommodative monetary policy has contributed to an uptick in credit to private sector and this is further supported by an increase in fixed investments for the fifth successive quarter according to the monetary policy statement announced by the State Bank of Pakistan in April,” the survey said. “With improvements in energy availability and lower input prices, supply conditions for manufacturing firms have also improved.”
The survey said declining exports continue to weigh on growth prospects. Pakistan’s exports declined 12.92 percent, in dollar terms, from July-March FY16 over the corresponding period of the previous fiscal year. New orders increased at a faster pace in March, registering an index value of 73.61, compared to 73.06 in January.
However, the production index decreased 1.67 points to 67.50. Meanwhile, inventory levels decreased 2.22 points to 59.72 (previously registered at 61.94). “Therefore, even though new orders grew at a faster pace than before, manufacturers were able to fulfil orders using existing inventories to meet the increased demand,” the survey said.
Meanwhile, supplier deliveries were slower at 53.06 compared to an index value of 51.67 in January. A reading of below 50 indicates faster deliveries and a potential cooling down of the economy and vice versa. Employment in the manufacturing sector also grew further, registering a value of 52.78. However, the pace of growth of employment appears to have stalled with the index value dropping 4.17 points.
The report said the prices-paid-and-prices-received indices both pointed to an overall increase in price levels (with index values above 50 for both), which corroborates with Pakistan’s current inflation dynamics. “CPI inflation has experienced a reversal since bottoming out in September 2015 at 1.32 percent year on year and currently stands at 3.94 percent YoY for March,” it said.
“Manufacturing concerns reported that the rate of increase of prices paid has also increased, with the prices paid index increasing 3.61 points to 63.06. Similarly, the rate of increase of prices received also accelerated, with the index increasing 3.61 points to 64.44.”
