ISLAMABAD: The quantum of large-scale manufacturing (LSM) rose 0.06 per cent in February, its third increase in a row, according to data released by the Pakistan Bureau of Statistics on Tuesday.

The quantum index of LSM industries was 126.01 points in February compared to 125.93 in the same month last year.

However, the index for the month was 4.14pc lower than for the previous month, Jan­­uary 2024, when it stood at 131.45 points.

The annual change in the LSM index has been mostly positive since August 2023, when it rose 0.26pc. Before that, the index was down for 13 consecutive months.

Index drops 0.51pc in July-February, its 20th cumulative fall in a row

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 considered to help pick up economic activity.

As for this fiscal year’s first eight months (July to February), the large-scale manufacturing index fell 0.51pc year-on-year to 117.99 points. The PBS data showed that the cumulative change in the index was in the negative for the 20th month in a row, i.e. since July 2022.

During July-February, 11 of 22 sectors witnessed positive growth, including food, beverages, wearing apparel, leather, wood products, coke and petroleum products, chemicals, pharmaceuticals, rubber products, machinery and equipment, and furniture.

According to the Finance Ministry Econo­mic Outlook for March 2024, the LSM cycle usually follows the cyclical movements in the main trading partners.

However, 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 the major export markets has improved and is currently above the neutral 100 benchmark. In Pakistan, the seasonally adjusted LSM output in February 2024 remains above the neutral benchmark, indicating a cyclical revival in large-scale manufacturing output.

Despite the domestic downside risks for the industrial sector such as high input cost and high policy rate, the cyclical component of LSM recorded above the potential level for the months of December and January of the ongoing fiscal year.

It is expected that this positive trend will continue in the upcoming months and LSM will post a modest growth as compared to fiscal 2023.

In the textile and clothing sector, positive growth was observed in yarn (3.44pc) and cloth (0.64pc) in February from a year ago.

However, a massive growth of 18.74pc was recorded in the garment sector in February from a year ago.

In the food group, wheat and rice production posted a negative growth of 0.51pc in February over the same month last year. The production of cooking oil rose 7.69pc while vegetable ghee saw a decline of 13.32pc during the month.

Petroleum products posted a negative growth of 16.85pc in February, mainly because of a decline in all products. In February, iron and steel production declined by 1.43pc. However, electrical equipment increased by 2.09pc.

The production of fertilisers experienced a surge of 33.14pc, while the production of rubber items grew 10.63pc. The production of pharmaceutical products experienced a significant surge, with an increase of 9.96pc. The manufacturing of machinery and equipment saw a growth of 28.98pc.

According to finance ministry report, the performance of the auto industry during July-February remained subdued due to massive increases in inputs prices and tightening auto finance.

Car production and sale dropped 40.8pc and 40.9pc, while trucks and buses production and sale decreased 50.6pc and 48.7pc, respectively. However, tractor’s production and sale increased by 68.6pc and 67.6pc.

Sales of total petroleum products dropped 13pc to 10.2 million tonnes during the eight-month period compared to 11.7m tonnes a year ago.

The total cement dispatches (domestic and exports) were 30.56m million tonnes, 2.5pc higher than in the year-ago period.

Published in Dawn, April 17th, 2024

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