HomeNewsBig industry expands in August after 11 months - Business

Big industry expands in August after 11 months – Business

ISLAMABAD: Large-scale manufacturing (LSM) registered year-on-year growth of 2.52 per cent in August, reversing the trend after 11 consecutive months of contraction, data released by the Pakistan Bureau of Statistics showed on Monday.

On month-on-month, it witnessed a growth of 8.44pc. This indicates a resurgence in industrial production, a development that followed the easing of opening letters of credit (LCs) starting from July 1.

The LSM expansion can primarily be attributed to an increase in production within the garments sector, followed by food, petroleum products and pharmaceutical products.

In a concerning trend, the production of LSM has experienced negative growth since August 2022. In FY23, the LSM shrank by 10.26 year-on-year. In FY22, the LSM expanded by 11.7pc year-on-year. The production estimate for LSM industries was made using the new base year of 2015-16.

The LSM is recovering from the slump. Although LSM remained positive in August, 10 out of 22 sectors picked up positive growth including food (7.95pc), wearing apparel (41.21pc), pharmaceuticals (41.81pc), petroleum products (30.81pc), non-metallic mineral products (11.98pc), machinery and equipment (14.61pc), football (27.90pc).

The better inputs situation through the lifting of import restrictions paves the way for sectoral growth, said the Finance Ministry in its economic update and outlook for September.

However, several sectors are still under pressure as tight financing facilities and inflationary pressures persistently hinder their production activities.

The significant number of job losses is a clear outcome stemming from the downturn experienced by major industries in FY23. The decrease in production capacity has resulted in a regrettable scenario, leaving numerous individuals unemployed.

The statistics shed light on the formidable obstacles confronting Pakistan’s manufacturing sector, fuelling apprehensions regarding the nation’s economic trajectory in the forthcoming months.

The textile sector’s production shrank 16.20pc in August over a year ago. Major negative growth originated from yarn (29.88pc), and cloth (17.21pc). Nominal growth was reported in the production of other products. The production of garments grew 21.21pc in August.

In the food group, wheat and rice production declined by 0.51pc in August over the last year. However, the production of cooking oil surged by 33.35pc, vegetable ghee by 8.48pc and blended tea by 21.97pc.

Petroleum products posted a positive growth of 30.81pc in the second month of 2023-24, mainly because of an increase in the production of petrol (22.22pc) and high-speed diesel (58.66pc), LPG (11.58pc) while almost all other petroleum products recorded a negative growth.

The auto sector also saw a 39.31pc slump in August as the production of almost all kinds of vehicles went down. The auto industry remained under pressure due to ongoing inflationary pressures and tight auto financing. The downturn was evident across all categories except tractors.

In the month under review, there was a notable decline in iron and steel production, which experienced a decrease of 2.17pc. Similarly, the production of electrical equipment witnessed a significant drop of 15.81pc.

The production of fertilisers experienced a surge of 1.37pc, while the production of rubber items witnessed a negative growth of 8.50pc. The production of pharmaceutical products experienced a significant surge, with an impressive increase of 41.81pc.

Published in Dawn, October 17th, 2023

Source: dawn.com

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