Large scale manufacturing expands 8.04pc in Feb

KARACHI: Large scale manufacturing (LSM) sector posted a staggering 8.04 percent year-on-year growth for February, official data showed on Saturday, as the key industries, including automobiles, cement and steel, are showing recovery on soft interest rate, improved energy supplies and trade incentives. 

The Pakistan Bureau of Statistics (PBS) said automobile sector recorded the highest 34.1 percent growth in February over the same month a year ago, followed by engineering products (23.81pc), food, beverages and tobacco (15.5pc), pharmaceutical (12.23pc), iron and steel products (8.88pc), coke and petroleum products (4.56pc), non-metallic mineral products (2.05pc) and textile sector (1.91pc).

In February, production of jeeps and cars rose almost 44 percent year-on-year, according to the ministry of industries, which recorded output of 36 items.

Compared to January, the LSM growth was 1.01 percent in February. 

LSM accounts for 10.9 percent of GDP and 80 percent of all the manufacturing activities.

The sector’s output surged 4.12 percent for the first eight months of the current fiscal year of 2016/17. The number is near to the government full-year target of 5.9 percent. LSM registered 3.21 percent growth in 2015/16.  

The highest growth was recorded in iron and steel products (16.15pc), followed by electronics segment (13.39pc), automobiles (10.04pc), pharmaceutical (8.48pc), non-metallic mineral products (7.07pc), food, beverages and tobacco (6.90pc), paper and board (5.71pc) and engineering products (2.76pc). 

Ministry of industries registered 4.56 percent rise in July-February 2016/17 over the same period a year ago. 

Robust construction activities led to an increase in demand of cement and steel products, while automobile sector elicited a boost from increased sales of tractors. Around 31,000 tractors were produced during the period under review. 

However, textile industry, which earns the country more than half of exports revenue, remained subdued.

The State Bank of Pakistan (SBP) said export decline and structural bottlenecks constrained the performance of the sector. 

“Efforts are needed to address the issues, like low investment on research and development, product development, innovation, branding and tapping of new markets; lack of skill upgradation and resulting low labour productivity; use of obsolete technology; and high export concentration in low-value added products,” the SBP said in a recent report on the state of Pakistan’s economy.

The Bank said the government’s recently announced export incentives package of Rs180 billion would take some time to make an impact on the sector’s performance.

PBS data further showed that provincial bureau of statistics, which track performance of 65 products from across the country, recorded 3.79 percent upward revision in the output in July-February. 

Production of deep freezers and refrigerators grew 53.87 percent and 24.2 percent, respectively during the period under review. 

The SBP said electronics sector witnessed a sharp turnaround during the first half of 2016/17, recording a growth of 14.5 percent, against a contraction of 8.2 percent during the same period last year. 

It said consumer durables like refrigerators (up 25.0 percent) and deep-freezers (up 54.4 percent) mainly contributed to this improved performance.

“Further rise in energy supply in the coming months, increase in consumer financing in a low interest rate environment, better market access for the rural population, expansionary plans of leading players, and foreign investment, all indicate a sustainable trajectory for the industry’s growth going forward,” it added. 

PBS said the Oil Companies Advisory Council, which measures output of 11 petroleum products, recorded 0.78 percent growth in July-February. Production of jute batching oil, motor spirits and liquefied petroleum gas soared 10.4, 9.92 and 9.89 percent, respectively.