LSM posts 4.14 percent growth in April on growing food demand

KARACHI: Large scale manufacturing (LSM) sector posted a 4.14 percent growth in April as compared to the same month a year earlier as growing consumer demand boosted production in the food and beverages sector, official data revealed on Wednesday.

Pakistan Bureau of Statistics (PBS) data showed that food, beverages and tobacco sector, having the highest weight in quantum index of manufacturing, grew 14.31 percent year-over-year in April with monthly impact of 2.97 percent. Auto sector had monthly growth impact of 1.64 percent, followed by non-metallic mineral products, including cement (1.51 percent) and coke and petroleum products (1.12 percent).

Iron and steel products saw a decline of 8.6 percent year-over-over in April.

“This was because of shortage in power supply to industries,” Adnan Sheikh, assistant vice president at Pak Kuwait Investment Co said. “K-Electric-SSGC row took a toll on industrial production.”

Dispute over gas supply quota from Sui Southern Gas Supply Company (SSGC) to K-Electric resumed power outages in the industrial city in April, but the government’s intervention brought some respite for the energy-deficient consumers.

Pharmaceutical sector’s output fell 29.64 percent in April over the same month a year ago. Other sectors that witnessed decline included leather products (17.58pc), engineering products (14.01pc), fertilisers (4.4pc) and chemicals (2.06pc). In April, LSM output sharply decreased 16.08 percent over March.

Sheikh termed the downturn as a general trend. “April usually sees production fall due to windup of sugar cultivation,” he said. PBS recorded sugar output at 810,800 tons in April as compared 1.592 million tons in March.

In July-April, LSM sector grew 5.76 percent, which is much less than the annual target of 6.3 percent set for the current fiscal year of 2017/18.

Analysts are estimating annual LSM growth rate at 5.8 percent, which is likely to hurt economic growth forecast. The government estimated growth at 5.8 percent for FY2018. Costs of energy and borrowing are going up due to rise in petroleum prices and interest rates, they added. Full-year economic growth might turn out less than the initial estimate considering a downward trend in LSM sector, which contributes 80 percent to the industry.

All the three data collection authorities registered increase in production during the first 10 months of the current fiscal year. Oil Companies Advisory Council, logging outputs of 11 oil and petroleum products, measured 12.98 percent rise in outputs during the period. Ministry of industries, measuring output trend of 36 items, recorded a 5.55 percent increase in production. Provincial bureau of statistics, counting production of 65 products, logged 4.69 percent growth in the July-April period.

Electronics sector recorded the highest growth of 40.45 percent during the period, followed by iron and steel products (22.88pc), automobiles (19.68pc), coke and petroleum products (12.98pc), non-metallic mineral products (12.42pc), paper and paper board (8.94pc), rubber products (6.11pc), food, beverages and tobacco (3.74pc), engineering products (3.27pc), pharmaceuticals (0.78pc) and textile (0.43pc). Production of wood products fell 34.32 percent in the July-April period. Other sectors that witnessed decline in outputs included leather products (9.72pc), fertilizers (7.95pc) and chemicals (0.44pc).