LSM grows 2.62pc in July on improved energy

KARACHI: Large scale manufacturing (LSM) grew 2.62 percent year-on-year in the first month of the current fiscal year of 2016/17 on a rise in production of construction related sectors, official data showed on Wednesday.

The Pakistan Bureau of Statistics (PBS), however, recorded a decrease of 2.59 percent in July compared with June. Iron and steel products grew 19.02 percent in July 2016 over July 2015, followed by non-metallic mineral products (12.68pc), pharmaceutical (6.94pc) and fertiliser (0.96pc).

Year-on-year, wood products witnessed the highest drop of 97.72 percent in output, followed by engineering sector (21.58pc), chemicals (4.10pc), food, beverage and tobacco (2.92pc), coke and petroleum products (1.20), leather products (0.96pc), and textile sector (0.10pc).

LSM data is computed on the basis of figures provided by Oil Companies Advisory Committee (OCAC), Ministry of Industries and provincial bureau of statistics.

The provincial bureau of statistics recorded the highest 3.35 percent rise in production of 65 items in July 2016 over the month a year earlier. Ministry of industries, calculating data of 36 products, registered 2.41 percent growth, while OCAC logged 1.44 percent surge in output of 11 petroleum products.

Month-on-month, the biggest fall was recorded by ministry of industries (3.69pc), provincial bureau of statistics (1.02pc) and OCAC (one percent).

Industrial sector showed good performance during the last year. Overall, the industries grew 6.8 percent mainly on a recovery in manufacturing and jump in infrastructure development projects.

Growth in LSM, contributing 10 percent to GDP, expanded 4.6 percent in FY16, up from 3.3 percent a year earlier.

The Asian Development Bank (ADB), in its recent report, said broad-based expansion featured a notable boost in automobile production that benefitted from the introduction of new models and special credit facilities offered by a provincial government, but also a surge in fertiliser production, increased gas supply, and much higher cement production to meet demand from a 13.1 percent uptick in construction.

The ADB said business confidence strengthened on improved credit, electricity and gas supply, and security, underpinning better performance across the economy.

It added that rapid growth in industry spilled over to the large service sector, which supplies around 60 percent of GDP, expanding it by 5.7 percent, up from 4.3 percent a year earlier. The upturn mainly reflected marked expansion in wholesale and retail trade and government services.

An analyst said the country might witness a surge in industrialisation as the general elections were fast approaching and the present government was incentivising the investment into the manufacturing sector. 

The government, in the budget for the current fiscal year, introduced a host of measures to promote industrial growth and employment generation. It announced tax credit for balancing, modernisation and replacement of plant and machinery and establishing of a new industry.

The government extended the period of exemption to investment in green field industrial undertakings, expiring on June 30, 2017, to the June-end of 2019. Further customs duty on import of industrial raw materials and machineries were cut to three percent from five percent earlier, which was expected to save the industrial sector an estimated Rs18 billion in a year.