LSM snaps 6-month downtrend in July

ISLAMABAD: Large scale manufacturing (LSM) sector has posted growth in July, first time in six months, as Covid-19 outbreak stirred latent potential of pharmaceutical and food industries despite shutdown setbacks to key industrial sectors, official data showed on Tuesday.

Pakistan Bureau of Statistics (PBS) data showed LSM output increased 5.02 percent year-on-year in the first month of the current fiscal year of 2020/21 and rose 9.5 percent if compared to June.

The growth was only visible in the industrial sectors which were needed amid the COVID-19 pandemic. Food, beverage and tobacco sector that has the highest weight in the quantum index of pharmaceutical sector recorded around 22 percent growth in output, followed by non-metallic mineral products (29pc), pharmaceuticals (19.2pc), and coke and petroleum products (18.3pc).

Other key industrial sectors continued to post contraction in July. Leather sector witnessed the biggest slide of 36 percent in production, followed by electronics (33.3pc), engineering (33pc), automobiles (23.3pc), wood products (19pc), rubber products (15pc), and iron and steel products (11.1pc).

July was the first month of growth after six months of depression aggravated by industrial and economic activity shutdown associated with the coronavirus. LSM which accounts for approximately 80 percent of manufacturing sector posted an increase of 10 percent year-on-year in December 2019.

LSM contracted 10.2 percent during the last fiscal year, second annual negative growth in a row since the government took charge, as demand remained suppressed on lack of policy reforms. LSM growth target for FY2020 was set at 3.1 percent. The output also moved in reverse direction of the FY2019’s target with big industry having dipped 2.3 percent as opposed to the annual target of 8.1 percent. The decline was the first contraction in a decade.

Overall, the manufacturing sector contracted 2.6 percent in FY2020 as shutdowns and supply chain disruptions related to COVID-19 exacerbated other adverse factors affecting the sector since FY2019, said Asian Development Bank in a report.

In July, all the three data collection authorities registered increase in production. Oil Companies Advisory Council, logging outputs of 11 oil and petroleum products, measured growth of 18.3 percent year-on-year. Provincial bureau of statistics, counting production of 65 products, logged 6.2 percent growth. Ministry of industries, measuring output trend of 36 items, recorded a 3.4 percent increase in production.

Production of fertilisers, cement, billets and motorcycles recorded noticeable growth in July, according the Pakistan Bureau of Statistics.