LSM output shrinks 11.6pc in February

ISLAMABAD: Large-scale manufacturing (LSM) shrank 11.6 per cent in February over the same month last year causing massive layoffs, especially in export-oriented textile industries, showed data released by the Pakistan Bureau of Statistics on Monday.

The slowdown in industrial output is mainly contributed to the textile and clothing industries because exports from the sector posted double-digit declines. It is expected that exports will further fall in the coming months.

The big industry production contracted for the sixth consecutive month of the current fiscal year indicating that economic growth will slip further. It is estimated that the fourth quarter will be more disturbing owing to the discontinuation of subsidised energy to industries along with the highest-ever cost of industrial inputs.

The International Monetary Fund has recently revised downward the economic growth to 0.5pc for FY23. Similar lower projections came from the World Bank and Asian Development Bank at 0.4pc and 0.6pc, respectively.

In January, the LSM growth declined by 7.9pc on a year-on-year basis as against a 3.51pc dip in December 2022. There was a negative growth of 5.49pc in November 2022, 7.7pc in October 2022 and 2.27pc in September 2022 on a year-on-year basis. While a paltry rise of 0.30pc was recorded in August after LSM shrank 1.67pc in July, the first month of the current fiscal year.

Between July and February, LSM also posted a negative growth of 5.56pc on a year-on-year basis.

In the previous fiscal year, large-scale manufacturing grew 11.7pc year-on-year. The production estimate for LSM industries was made using the new base year of 2015-16.

Economists have been raising concerns about a slowdown caused by record energy and raw material prices along with restrictions on imports. The export-based manufacturers have already hinted at a decline in their production due to higher costs of energy and other inputs mainly because of the discontinuation of subsidised electricity.

The production of 18 sectors shrank and only two posted a marginal rise.

In February, the textile sector production shrank 19.67pc over a year ago. Major negative growth originated from yarn (30.11pc), and cloth (17.70pc). Nominal growth was reported in the production of other products.

The production of garments posted a paltry negative growth of 2.99pc during February. The production of garments entered negative growth for the first time in February as it grew in the previous seven months.

In the food group, wheat and rice production dipped by 18.50pc and tea blended by 29.95pc. However, the production of cooking oil was up by 14.19pc and vegetable ghee by 19.43pc, respectively.

Petroleum products posted a negative growth of 6.35pc in February FY23, mainly because of a decline in the production of petrol and high-speed diesel while almost all other petroleum products recorded a slowdown except solvent naphtha.

The auto sector also saw a 64.08pc slump in February as the production of almost all kinds of vehicles went down, except for buses and diesel engines.

The production of iron and steel dipped 9.19pc during February mainly because of a decline of 23.85pc in billets/ingots, whereas that of non-metallic mineral products dipped 1.33pc. However, chemical products posted a positive growth of 2.96pc in February from a year ago.

The production of pharmaceutical products dipped 25.47pc, rubber products 4.88pc and fertilisers 25.01pc in February from a year ago.