Big industry output contracts in October

ISLAMABAD: Large-scale manufacturing (LSM) contracted in October after two months of consistent growth, data released by the Pakistan Bureau of Statistics showed on Friday.

The LSM shrank 4.08 per cent in October on a year-on-year basis. The main contributors to negative growth are textile, paper and board, iron and steel products, electrical equipment, automobiles and furniture.

The LSM turned positive in August after 14 months of contraction and extended the growth in September as well.

Opening for letters of credit (LCs) has been permitted since July 1, after being restricted to a few consumers and some important sectors the previous year.

The removal of import restrictions, clearance of outstanding LCs, and improved dollar liquidity in the markets following an increase in SBP forex reserves are considered to help in a pick-up in economic activity.

Although LSM remained negative in October as 13 out of 22 sectors picked up negative growth including beverages (-8.16pc), wearing apparel (-1.83 pc), petroleum products (-8.19pc), non-metallic mineral products (-12.03 pc), electrical equipment (-17.320pc), tobacco (-37.16pc), transport equipment (-10.69pc).

The LSM shrank 0.44pc in the first four months of the current fiscal year from a year ago.

The textile sector’s major negative growth originated from yarn (3.74pc), cloth (5.90pc) and garments 1.83pc in October from a year ago. Nominal growth was reported in the production of other products.

In the food group, wheat and rice production declined by 5.02pc in October over the last year. However, the production of cooking oil rose 18.39pc, blended tea by 13.37pc and vegetable ghee 5.20pc during the month under review.

Petroleum products posted a negative growth of 8.9pc in October, mainly because of a decline in the production of petrol (14.88pc) and high-speed diesel (9.68pc), LPG (1.92pc). However, kerosene grew 39.27pc while almost all other petroleum products recorded a negative growth.

In October, there was a notable decline in iron and steel production, which experienced a decrease of 1.56pc and electrical equipment 17.20pc.

The production of fertilisers experienced a surge of 8.81pc, while the production of rubber items witnessed a growth of 9.77pc. The production of pharmaceutical products experienced a significant surge, with an impressive increase of 26.56pc.

The auto sector also saw a 58.31pc slump in October as the production of almost all kinds of vehicles went down.

According to the finance ministry, the performance of auto industry remained subdued in July-October FY24 due to massive increases in inputs’ prices and the tightening of auto finance. Car production and sales decreased by 52.8pc and 47.4pc, while trucks & buses production and sales decreased by 54pc and 45pc. However, the tractor’s production and sales increased by 55.1pc and 86.8pc.

The sales of petroleum products slumped 18pc to 5m tonnes in 4MFY24 against 6.2m tonnes in the same period last year. In October, oil sales recorded at 1.3m tonnes, down 24pc year-on-year.