LSM shrinks 7.76pc in April, 3.51pc in first 10 months

ISLAMABAD: The large-scale manufacturing (LSM) sector shrank 7.76 percent in April -- a fifth straight month fall -- from a year ago and 9.40 percent from the previous month, offering further evidence of a sharp slowdown in economic growth in the last quarter of outgoing fiscal year.

The LSM in first ten months of the current fiscal year of 2018/19 posted a 3.51 percent decline over the same period of the last fiscal year, data released by the Pakistan Bureau of Statistics (PBS) showed.

The downbeat data showed more troubles ahead for the shrinking manufacturing sector, already struggling with decline in cheap loans and high cost of business on spike in policy rate and devaluation of rupee.

“Besides other issues, comparatively expensive borrowing and rupee devaluation are hitting the industries hard and increasing the cost of production while squeezing the value of assets and capital,” an industrialist said. “Investors are standing at bay and waiting for stability in rupee and interest rates to take future business decisions.”

Rupee has lost over a quarter of its value over the past year. Economy expanded 3.3 percent in fiscal 2018/19 and growth is set to slow further next fiscal year as the government’s efforts to reduce debt risks curb credit flows to the private sector, while a stringent fiscal measures dents industrial activity.

PBS data showed that top performers were electronics that grew 0.56 percent and fertilizers grew 0.26 percent during the first ten months. However, leather products, engineering products, rubber products and wood products showed almost zero growth.

Food beverages and tobacco production declined 1.51 percent, followed by automobile sector with decline 0.71 percent, Pharmaceuticals production reduced by 0.60 percent, iron & steel 0.48 percent, non-metallic mineral products 0.44 percent, coke & petroleum products 0.39 percent, paper & board 0.10 percent and textiles production reduced by 0.08 percent during July-April 2018/19 over same period of last year.

In July-April, 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 3.01 percent fall in output during the first ten months. OCAC, logging outputs of 11 oil and petroleum products, measured a 0.39 pc decrease, while provincial bureau of statistics, counting output of 65 products, logged a negative growth of 0.11 percent during the period under review over corresponding of last year.

Sugar production fell 18.39 percent to 5.275 million tons in the July-April 2018/19, while in April 2019, its production decreased by 53.52 percent over same month of last year. Cotton yarn production increased by 0.02 percent to 2.859 million tons in these ten months, and in April it increased by 0.3 percent.

Cement output was down 4.38 percent to 33.48 million tons, while it increased 4.23 percent year-on-year in April 2019. Cars and jeeps production declined 2.93 percent to 190,913 in ten-month period, while 27.19 percent dip was seen in April.