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Tuesday March 19, 2024

LSM growth clocks in at 2.76 percent in May

By Tariq Ahmed Saeedi
July 19, 2018

KARACHI: Large scale manufacturing (LSM) grew 2.76 percent in May as compared to the corresponding month a year earlier as retail sector thrived on growing consumer demand, while construction boom kept fuelling steel production, official data showed on Wednesday.

Pakistan Bureau of Statistics (PBS) data showed that food, beverages and tobacco production grew 16.28 percent with year-on-year growth impact of 2.43 percent in May. Coke and petroleum products had the growth impact of 1.22 percent, followed by non-metallic mineral products (0.87pc), iron and steel products (0.54pc) and automobiles (0.39pc).

In May, production of cooking oil soared 23.33 percent year-on-year to 44,150 tons, while vegetable ghee output inched up three percent to 117,080 tons. Production of coke, pig iron and billets also increased during the month.

Adnan Sheikh, assistant vice president at Pak Kuwait Investment Co. said import restriction by the government might have augured well for the local industries.

“Local edible oil production increased due to growing demand,” Sheikh added.

PBS recorded a 11.63 percent decrease in LSM production in May over April, while it registered a six percent growth in the manufacturing during the first 11 months of the current fiscal year of 2017/18.

“The production in July-May 2017-18 as compared to July-May 2016-17 have been significantly increased in food, beverages and tobacco, coke and petroleum products, pharmaceuticals, non-metallic mineral products, automobiles, iron and steel products, electronics and paper and board while decreased in fertilisers and leather products,” the PBS said in a statement.

Analysts are, however, skeptic about the LSM sector’s ability to achieve the annual growth target of 6.3 percent in the last fiscal year of 2017/18.

They 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 industrial sector.

All the three data collection authorities registered increase in production during the July-May period of FY2018. Oil Companies Advisory Council, logging outputs of 11 oil and petroleum products, measured 13.53 percent rise in outputs during the period. Provincial bureau of statistics, counting production of 65 products, logged 6.1 percent growth. Ministry of industries, measuring output trend of 36 items, recorded a 5.31 percent increase in production.

The sectors that registered increase during the first 11 months, with cumulative growth impact, included textile (0.1pc), food, beverages and tobacco (1.34pc), coke and petroleum products (0.8pc), pharmaceuticals (0.14pc), non-metallic mineral products (1.3pc), automobiles (1.24pc), iron and steel products (0.85pc), electronics (0.65pc), paper and board (0.29pc), engineering products (0.01pc) and rubber products (0.03pc).

The sectors that recorded decrease included chemicals (0.02pc), fertilisers (0.58pc) and leather products (0.16pc).