LAHORE - Economic activity in the manufacturing sector expanded in May 2014 but at a slower pace than March 2014, figures say.

The data is obtained from a survey of manufacturing managers based on information they collected within their respective organizations. The Purchasing Managers Index (PMI) reading was registered at 63.71 for the month of May2014. A reading above 50 shows expansion in the manufacturing sector and economy. New Orders and Production Indices reported a value of 70.5 and 67.4 respectively. The Employment Index registered a reading of 57.2. The Prices Paid and Prices received Indices showed the readings of 65.4 and 58.5 respectively.

The company executives in the MCB Purchasing Managers Index said that May 2014 reflects the 3rdconsecutivereading of growth in the manufacturing sector but at a slower pace than the two previous readings.

May 2014 MCB PMI indicates a slight slowdown in the manufacturing sector but it is still growing at a healthy pace. New orders index showed a reading of 70.5with higher number of survey respondents replying increase in new orders. However the index value is a 3rd consecutive drop since the PMI survey started (January) which indicates slack in demand. Consequently the inventory levels have also dropped from a previous reading of 63.5 to 62.6 (-0.9) which shows efficient inventory management as the demand slows. Production level has also dropped by 1.8 points to 67.4 in line with the drop in new orders. The biggest hit of the slack in manufacturing sector was witnessed in employment index which dropped from 60.2 to 57.2 showing a decline of 3.0 points. During the March – May period only 18.5% (previous 22.5%) of the survey respondents added new jobs. The supplier deliveries index dropped 0.6 points which shows faster deliveries than the previous reading in March. On the price front we can clearly see the price pressure building up as the prices paid index value increased by 3.7 points to 65.4 while price received dropped from 62.3 to 58.5. The spread between price paid and prices received index stands at 6.9 which is highest since we started the MCB PMI. This hints at increase in prices by the manufacturers in the near future if the cost of raw material does not come down.