MCB Bank PMI for Jan­uary 2016 in­creases to 64.54

The Pak Banker - - FRONT PAGE -

Eco­nomic ac­tiv­ity in the man­u­fac­tur­ing sec­tor ex­panded in Jan­uary 2016 at a faster pace than in Novem­ber 2015, ac­cord­ing to com­pany ex­ec­u­tives sur­veyed in the MCB Bank Pur­chas­ing Man­agers In­dex (PMI). The PMI for the month of Jan­uary reg­is­tered a value of 64.54, an in­crease from Novem­ber's read­ing of 63.25. As a rule of thumb, a read­ing of 50 or above in­di­cates that man­u­fac­tur­ing ac­tiv­ity and the over­all econ­omy ex­panded.

At present, the man­u­fac­tur­ing sec­tor ap­pears to be grow­ing at a solid pace with Large-Scale Man­u­fac­tur­ing (LSM) in­creas­ing on a year-onyear ba­sis by 4.43% in the Jul - Novem­ber FY16 pe­riod, ac­cord­ing to Pak­istan Bureau of Sta­tis­tics. More­over, credit to pri­vate sec­tor in­creased by Rs. 339.8 bil­lion dur­ing H1-FY16 due to the ben­e­fits of mon­e­tary eas­ing, im­prov­ing fi­nan­cial con­di­tions of the cor­po­rate sec­tor and a gen­eral up­lift in busi­ness en­vi­ron­ment in the coun­try, ac­cord­ing to the State Bank of Pak­istan.

Cru­cially, firms were en­cour­aged to avail credit not only to fi­nance work­ing cap­i­tal but also fixed in­vest­ments which will pro­duce fur­ther ex­pan­sion in the man­u­fac­tur­ing sec­tor go­ing for­ward. On the down­side, a weak cot­ton har­vest and de­clin­ing ex­ports con­tinue to weigh in on growth prospects as high­lighted by the In­ter­na­tional Mon­e­tary Fund at the con­clu­sion of the Tenth Re­view of the Ex­tended Fund Fa­cil­ity (EFF) ear­lier this month. Pak­istan's ex­ports, in par­tic­u­lar, have de­clined by 14.37%, in dol­lar terms from July - Jan­uary FY16 when com­pared with the cor­re­spond­ing pe­riod of the pre­vi­ous fis­cal year, ac­cord­ing to the Pak­istan Bureau of Sta­tis­tics.

The Jan­uary MCB Bank PMI in­di­cates that man­u­fac­tur­ing ac­tiv­ity con­tin­ued to grow for the 13th con­sec­u­tive read­ing and at a much faster pace com­pared to Novem­ber. New or­ders in­creased at a faster pace in Jan­uary, reg­is­ter­ing an in­dex value of 73.06, com­pared to 70.56 in Novem­ber while Pro­duc­tion Level in­creased 1.94 points to 69.17. With sales and pro­duc­tion lev­els both ac­cel­er­at­ing fur­ther, fin­ished in­ven­to­ries fol­lowed a sim­i­lar trend as man­u­fac­tur­ers in­creased in­ven­to­ries in an­tic­i­pa­tion of fu­ture de­mand. The in­ven­to­ries in­dex in­creased from 61.67 to 61.94.

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