Large-scale manufacturing shrinks 10.17pc in FY20

ISLAMABAD: The large-scale manufacturing (LSM) output dipped 10.17 per cent in 2019-20, showed data released by the Pakistan Bureau of Statistics (PBS) on Wednesday.

The declines in big industry output have decelerated since May owing to a resumption of production especially in the textile sector. The revival is clear from the LSM numbers that were up 16.81pc in June month-on-month from May.

The LSM tumbled 24.8pc year-on-year in May.

However, the LSM in June was still down 7.74pc on a year-on-year basis.

Lowering of interest rates and reduction in duties on raw materials is expected to spur economic activities.

Month-on-month figures show activity picking up in some sectors

In the pre-Covid days, the LSM index returned to red after witnessing a growth of 9.66pc in December 2019, which was led by impressive performance in sugar production, rising by 97pc.

A finance ministry official said the exchange rate depreciation, contractionary monetary and fiscal policies (before coronavirus outbreak) plunged the LSM in FY20. The contraction in textile and food, beverages and tobacco, iron and steel, coke and petroleum products dampened the overall manufacturing in the country.

Sector-wise, production of 11 items under the Oil Companies Advisory Committee went down by 20.10pc during FY20, 36 items under the Ministry of Industries and Production by 11.20pc while 65 reported by the provincial Bureaus of Statistics fell 5.52pc.

The LSM constitutes 80pc of the country’s total manufacturing and accounts for nearly 10.7pc of the national output. In comparison, the small-scale industry makes up for just 1.8pc of GDP and 13.7pc of the secondary sector.

The government has projected a target growth of 3.1pc for the FY20. In the FY19, the big industry had declined 3.64pc versus a target growth of 8.1pc.

As per the PBS data, auto sector was the major laggard with massive declines in sales in FY20 on account of multiple upward price revisions due to currency depreciation.

On a yearly basis, the sector saw production of tractors plunging 34.66pc, while that of trucks 51.2pc. The production of buses plunged by 41.73pc, while that of jeeps and cars by 54.84pc, LCVs 50.65pc, and motorcycles 23.51pc.

It was noted that production of tractors and motorcycles revived in June 2020 owing to improvement in sales.

The PBS data for the FY20 showed output of all 11 petroleum products was down 20.1pc compared to the same period last year. The production of two major oil products — petrol and high-speed diesel mostly used in the transport sector and agriculture — was down 13pc and 20.04pc respectively.

The production of furnace oil was also down by almost 22.63pc during the year under review, compared to previous year, but this could be attributed to its declining share in power generation. Jet (airline) fuel output was also down by 28.6pc and that of kerosene by 23pc.

The production of lubricating oil and jute batching oil was down 29.34pc and 10.06pc respectively during the FY20. LPG production and solvent naphtha during the fiscal year under review dipped by 10.75pc and 30.56pc respectively.

Meanwhile, sugar production edged lower by 7.2pc year-on-year in FY20 while that of cement fell 2.01pc.

In the pharmaceutical sector, the output of tablets declined by 0.88pc, syrups 6.37pc, and injection 4.53pc whereas that of capsules increased 6.39pc.

Cooking oil and vegetable ghee production was up 9.05pc and 3.55pc respectively whereas that of blended tea dipped 8.31pc.

At the same time, production of electronic goods contracted due to demand slowdown of items like refrigerators, deep freezers, air-conditioners, electric–bulbs, tube, fans, motors, meters, switch gears, tv sets etc.

The production of tubes, tyres and machinery also went down during the year under review.