LSM posts 2.3 percent decline in first seven months

ISLAMABAD: Large scale manufacturing (LSM) sector posted a 2.3 percent decline in the first seven months of the current fiscal year of 2018/19, official data showed on Thursday, as industrial output continued to scale down on growing cost of production.

Pakistan Bureau of Statistics (PBS) said LSM output fell 4.64 percent year-on-year in January, but it rose 20.82 percent during the month over the preceding month.

“The production in Jul-Jan 2018-19 as compared to Jul-Jan 2017-18 has significantly decreased in food, beverages and tobacco, coke and petroleum products, pharmaceuticals, non-metallic mineral products, automobiles and iron and steel products, while it has increased in fertilisers and electronics,” the bureau said in a statement.

While weak rupee has led to some benefits to exporters, it created upside risks for the industry by increasing cost of production in the country that is net importer of oil and machinery. Rupee has been devalued three times since July 2018. Fragile rupee also militated against the benefits of soft oil prices that declined 11.3 percent during the last nine months.

The National Economic Council set a highly-ambitious target of 8.1 percent for LSM, which accounts for 80 percent of the industry, for the current fiscal year. LSM grew 5.38 percent during the last fiscal year of 2017/18, much below the annual target of 6.3 percent.

In July-January, all the data collection authorities, including Oil Companies Advisory Council (OCAC), ministry of industries and provincial bureau of statistics registered decrease in production over the corresponding period a year earlier.

Ministry of industries, measuring output trend of 36 items, recorded a 1.72 percent fall in output during the first seven months. OCAC, logging outputs of 11 oil and petroleum products, measured a 0.30 decrease, while provincial bureau of statistics, counting output of 65 products, logged 0.28 percent decline during the period under review.

Sugar production fell 19.1 percent to 2.125 million tons in the July-January period. It decreased 9.98 percent year-on-year in January. Cement output was down 2.72 percent to 23 million tons, while it fell nine percent year-on-year in January. Production of tractors fell 29.1 percent in the seven months and 73.9 percent year-on-year in January. Production of trucks slid 20.8 percent in July-January and dropped 41.6 percent in January. Motorcycle and light commercial vehicles production also decreased. Ministry of industries, however, recorded increase in output of buses and jeeps and cars.

In July-January, furnace oil production was down 11.88 percent. High speed diesel output dropped 5.94 percent.

Production of motor spirits increased 12.4 percent. Diesel oil output rose 35.7 percent. Lubricating oil production increased 16 percent, while output of liquefied petroleum gas soared 36.9 percent in the seven-month period.

Provincial bureau of statistics recorded decrease in outputs of 31 items, including cooking oil, tea, wheat, soft drinks, carpet yarn, wheat thrashers, bulbs, and television sets. Products that witnessed increase in production included starch and its products, juices, plywood, acids, chlorine, tyres and tubes and sugarcane machines, according to the PBS.