Big industry falters as growth slows to 0.54pc in August

ISLAMABAD: Pakistan’s large-scale manufacturing (LSM) sector nearly stalled in August 2025, growing by just 0.54 percent year-on-year, a sharp slowdown from the robust 8.99 percent growth recorded in July, as factories grappled with waning demand and soaring production costs.

Month-on-month, industrial output contracted 2.75 percent from July, signaling a fragile recovery amid tight monetary conditions and persistent inflationary pressures.

Between July and August FY2025-26, the LSM sector posted a modest 4.44 percent growth over the same period last year, according to the Pakistan Bureau of Statistics (PBS).

The sector, which makes up 68 percent of total manufacturing and contributes about 8 percent to GDP, remains pivotal for the country’s economic growth. Economists warn that such subdued momentum could dampen overall GDP expansion this fiscal year if the trend persists.

Production gains were seen in food, tobacco, wearing apparel, non-metallic minerals, electrical equipment, automobiles, and other transport equipment. However, declines were reported in beverages, textiles, chemicals, iron and steel, machinery, and furniture, reflecting uneven recovery across industries.

PBS data show furniture output plunged 56.6 percent, machinery and equipment dropped 45.4 percent, coke and petroleum products fell 13.6 percent, and garments shrank 10.65 percent year-on-year. Pharmaceuticals and iron and steel were also down 4.6 percent and 3.2 percent, respectively.

In contrast, automobile production soared 130.7 percent, driven by a rebound in demand and easing supply constraints. Other transport equipment jumped 40.87 percent, tobacco rose 23.4 percent, rubber products increased 21.77 percent, while cement and non-metallic minerals grew 18.55 percent and 18.1 percent, respectively.

The manufacturing sector continues to face high energy tariffs, expensive raw materials, weak consumer spending, and elevated policy rates, making recovery fragile and uneven. Analysts say a sustained rebound would require policy support to lower input costs and boost industrial competitiveness.