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ISLAMABAD: The country’s large-scale manufacturing (LSM) sector recorded a consistent growth for the fourth consecutive month with a 2.04 per cent increase in March compared to the same period last year, according to data released by the Pakistan Bureau of Statistics on Wednesday.
The quantum index of LSM industries was 115.53 points in March this year, while it stood at 113.21 in the same month last year. However, the index for March contracted 9.35pc from February 2024 — 127.44 points.
The annual change in the LSM index has been mostly positive since August, when it rose 0.26pc. Before that the index was down for 13 consecutive months.
The removal of import restrictions, clearance of outstanding letters of credit and improved dollar liquidity following improvement in the State Bank’s foreign exchange reserves are being seen as stimulants for the economy.
As for this fiscal year’s first nine months (July to March), the LSM fell 0.10pc year-on-year to 117.88 points. The PBS data showed the cumulative change in the index was negative for the 20th month in a row, i.e. since July 2022.
Twelve out of 22 sectors recorded negative growth during the first nine months of this fiscal year _ July 2023 to March 2024. These sectors included chemicals, beverages, tobacco, textile, paper & board, non-metallic mineral products, iron & steel products, fabricated metals, computer, electronics and optical products.
According to the finance ministry’s Economic Outlook for April, the LSM cycle usually follows cyclical movements in the country’s main trading partners, but since it is focused on the main industrial sectors and not on total GDP, it is somewhat more volatile than the cyclical component of GDP in Pakistan’s main export markets.
The economic situation in major export markets has been improving since October 2022 and now their cyclical component of GDP is above the neutral 100 benchmark for the third consecutive month.
The cyclical component of LSM recorded above the potential level for December and January FY2024, despite a challenging environment for the industrial sector. Nonetheless, the cyclical component of LSM was recorded below potential for February, mainly due to the year-on-year (YoY) negative growth of high-frequency variables like cement, production of automobiles, textile production, in March.
However, it is expected that LSM output will show positive YoY growth during the remaining months of the current fiscal year due to better crop production and improved foreign demand. The year-on-year growth in LSM will also benefit in the short term from a low base effect in the corresponding months of FY2023.
Textiles and clothing
In the textile and clothing sector, positive growth was observed in yarn (3.54pc) and cloth (0.62pc) in March from a year ago. However, a massive growth of 18.18pc was recorded in the garment sector in March over the same month of last year.
In the food group, wheat and rice production posted a paltry growth of 0.65pc in March over the same month last year. The production of cooking oil declined 4.53pc while vegetable ghee saw a decline of 14pc during the month.
The production of fertilisers experienced a surge of 25.35pc, while the production of rubber items grew 9.66pc. The production of pharmaceutical products experienced a decline of 0.50pc. The manufacturing of machinery and equipment saw a growth of 13.67pc.
According to the finance ministry’s report, during July-March FY2024, the performance of auto industry remained subdued due to a jump in input prices and tightening of auto finance.
Car production and sales fell by 36.6pc and 36.9pc, while trucks & buses production and sales was down by 45.2pc and 44.2pc.
However, the production and sale of tractors rose by 59.7pc and 65.8pc, respectively.
During the first nine months of FY2024, sales of petroleum products dropped by 11pc to 11.34 million tons, compared to 12.8m tons in the same period of last year.