LSM grows by 1.01 percent in September

ISLAMABAD: The industrial output grew for the second consecutive month in September, rising by 1.01 percent year-on-year, as the country's economy shows a sign of recovery from a prolonged slump, official data showed on Wednesday

Pakistan Bureau of Statistics (PBS) data showed the growth was driven by increases in production of food, beverages, garments, leather products, coke and petroleum products, chemicals, and pharmaceuticals.

However, textiles, automobiles, non-metallic minerals, football, tobacco, wood products, paper and board, rubber products, iron and steel, computer, electronics, and optical products, and furniture all experienced declines. In July 2023, the large-scale manufacturing (LSM) sector contracted by 1.09 percent year-on-year. However, in August, it reversed the trend, showing a green signal and reporting 2.5 percent growth.

Analysis of data revealed that, out of 25 sectors, 13 sectors displayed positive growth, leaving the remaining in negative territory in September. The same was the case with the first quarter (July-Sept 2023/24) cumulative growths of these sectors.

The LSM's quarterly growth was 0.68 percent over the same period of the previous fiscal. In this quarter, output increased in several sectors, including Food, Beverages, Wearing Apparel, Coke & petroleum Products, Chemicals, Fertilizers, Pharmaceuticals, Non-Metallic Mineral Products, Machinery and Equipment, and Other Manufacturing (Football).

However, a decline was observed in the production of Tobacco, Textile, Iron & Steel Products, Electrical Equipment, Automobiles, Other Transport Equipment, and Furniture during the same period, in comparison to July-September 2022-23.

Interestingly, during the fiscal year 2022-23, the large-scale manufacturing (LSM) sector contracted by 10.26 percent, with almost all major industries reporting substantial declines. The economic downturn was linked to expensive bank financing, rupee devaluation, import reductions, high energy costs, and political turmoil. In FY22, a strong growth rate of 11.7 percent was achieved, aided by affordable funding and favorable policies fostering production and GDP expansion.

The manufacturing sector, as indicated by monthly data, witnessed a pervasive contraction throughout FY23. This decline, initiated in May 2022, extended into the early month of FY23 in July, registering a 1.86 percent contraction.

The downturn persisted with successive monthly contractions: a 7.8 percent decline in January 2023, followed by a more pronounced decrease of 11.59 percent in February. March exhibited a substantial decline of 25 percent, and April experienced a negative growth of 21.07 percent. The contraction continued in May at 14.4 percent and worsened in June 2023, reaching a negative 14.96 percent.

During the month, several key sectors reported increased output compared to the same period in the previous year. Food production saw a 1.38 percent increase. Beverages rose by 10 percent, and garments surged by 48 percent. Leather products experienced a 5.76 percent uptick. Coke & and petroleum products increased by 17 percent, and chemicals saw a 1.7 percent rise, including a 0.89 percent increase in chemical products and a 2.23 percent increase in fertilizers.

Similarly, pharmaceuticals recorded a substantial growth of 29.5 percent. Fabricated metals saw a 12.7 percent increase. Machinery and equipment spiked by 148.2 percent. Electrical equipment rose by 3.9 percent, and other transport equipment output increased by 3.15 percent over a year ago. However, textiles experienced a significant decline of 21.8 percent. Automobiles dropped by 22.9 percent, and non-metallic minerals decreased by 3.5 percent. Football production declined by 1.6 percent, and tobacco saw a sharp decline of 57 percent.

Wood products decreased by 8.7 percent, and paper and board production fell by 5.96 percent. Rubber products declined by 2.1 percent, and iron and steel production decreased by 1.74 percent. Computer, electronics, and optical products dropped by 22.6 percent, and furniture production plummeted by 58.6 percent. Cotton yarn fell by 29.8 percent, cotton cloth declined by 17.2 percent, and cement production decreased by 5.3 percent.