December data shows rebound in large-scale manufacturing

Updated February 15, 2020

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The LSM index jumped by 9.66 per cent year-on-year in December 2019. — Dawn/File
The LSM index jumped by 9.66 per cent year-on-year in December 2019. — Dawn/File

ISLAMABAD: Pakistan’s large-scale manufacturing (LSM) output revived in December, posting growth after declining in eight consecutive months.

The LSM index jumped by 9.66 per cent year-on-year in December 2019, the Pakistan Bureau of Statistics (PBS) reported on Friday.

Compared to November, the LSM index surged by 16.4pc during the month under review. The resurgence in industrial growth is expected to send a positive signal and help accelerate the sluggish economic growth projected in the current fiscal year.

The latest monthly increase was mainly led by 41.57pc growth in food and beverages, 33.4pc in paper and board and 16.1pc in leather products.

However, during July-December 2019, the LSM contracted by 3.35pc from a year ago.

In 2018-19, the big industry had decreased by 3.64pc versus a target growth of 8.1pc, which for the ongoing was fiscal year had been set at 3.1pc.

Sector wise, production of 11 items under the Oil Companies Advisory Committee edged up by 1.23pc, 36 items under the Ministry of Industries and Production went up by 10.69pc while 65 items reported by the Provincial Bureaus of Statistics inched higher 8.6pc.

The extended downward trajectory of LSM contributed to the overall economic slowdown, as the State Bank of Pakistan estimated the economy to grow by 3.5pc in 2019-20.

LSM constitutes 80pc of the country’s total manufacturing and accounts for nearly 10.7pc of the national output.

In comparison, small-scale manufacturing accounts for just 1.8pc of GDP and 13.7pc of secondary sector.

The auto sector, which has seen massive decline in sales over the last few quarters, witnessed multiple upward price revisions due to currency depreciation, which kept potential buyers at bay. On a yearly basis, it registered sales decrease in almost all variants during the first half year of the ongoing fiscal year.

The production of tractors dipped by 54.74pc, trucks 41.45pc, buses 25.68pc, jeeps and cars 37.14p, LCVs 67.57pc and motor cycles 3.48pc.

Pharmaceutical also suffered due to a considerable lag in regulatory adjustments in prices, which in addition to the weakening of rupee added to the distress of the import-dependent sector.

As a result, the production of syrups declined by 4.20pc, and tablets 0.9pc. However, the production of injections increased by 1.14pc and capsules by 368pc during December.

Similarly, sugarcane output has increased by 97.14pc in December from a year ago. Among non-metallic mineral products, cement was up 7.93pc in December, led by increase in construction activity.

Moreover, production of cooking oil and vegetable ghee went up by 11.20pc and 13.57pc respectively. However, blended tea production fell by 31.94pc.

According to the Annual Plan 2019-20, the industry output is expected to expand with the implementation of envisaged policy measures. It anticipates private sector investment to lead the revival of economic activity with the help of necessary regulatory support.

Published in Dawn, February 15th, 2020