ISLAMABAD: Despite a downward interest rate trajectory, the Large-Scale Manufacturing (LSM) sector contracted 0.64 per cent in the first four months of the current fiscal year, data released by the Pakistan Bureau of Statistics showed on Monday.

The LSM grew slightly at 0.02pc in October on a year-on-year basis. However, it dipped 2.24pc on a month-on-month basis.

Since August, the LSM declined for three consecutive months. Domestic and global factors contributed to the downturn. The LSM grew positively from December 2023 to May before entering negative territory in June.

On a YoY basis, LSM dipped 2.65pc in August, followed by a decline of 1.92pc in September. However, the LSM rebounded with a paltry growth of 0.02pc in October. The big industry output grew 2.38pc in July.

In FY24, the LSM sector contracted 0.03pc against a 0.92pc growth in the preceding year.

The food group expanded by 2.22pc in 4MFY24 on a YoY basis. Cooking oil, starch-related items and wheat and rice milling experienced a rise of 2.10pc, 0.42pc, and 4.37pc, respectively. Wheat and rice milling increased substantially less during the period under review, owing primarily to improved crop harvests.

However, vegetable ghee production declined 3.32pc and tea blended 4.34pc.

The textile sector grew 2.60pc in 4MFY24 on a YoY basis. Cotton yarn production increased 8.80pc, while cotton cloth witnessed a paltry growth of 0.81pc. The primary cause of the rise in output was a slight increase in export unit value in the face of higher external demand for textiles.

The exports of garments recorded a growth of 16.09pc on a YoY basis. The surge in garment exports is primarily due to diverting foreign purchasers from Bangladesh to Pakistan.

However, textile associations are complaining about higher power prices following the elimination of energy subsidies for export-oriented sectors, the high cost of imported raw materials, the phase-out of the Export Finance Scheme, and high loan rates, all key factors impacting textile output.

Coke and petroleum products recorded a growth of 1.33pc in 4MFY24. Diesel oil increased 3.31pc, kerosene 30.06pc, furnace oil 0.86pc and jute batching oil 67.33pc. However, petrol and LPG declined 0.60pc and 8.96pc, respectively.

The automobile production grew 42.86pc in 4MFY24 on a YoY basis, mainly contributed by a 40.36pc rise in jeeps and cars production, followed by LCVs 195.92pc, trucks 89.49pc, and buses 32.80pc. However, the production of diesel engines declined by 8.87pc.

In the last few years, the automotive industry has grappled with many challenges, including a decline in demand, exacerbated by factors such as rising car prices due to inflation and currency fluctuations. Moreover, non-enticing auto financing options offered by banks further dampen consumer interest.

The production of pharmaceutical products saw a growth of 2.02pc and fertilisers 3.82pc, respectively.

Iron and steel production declined 12.42pc in 4MFY24. Billets/ingots, mostly consumed in the construction industry, experienced a 29.32pc decline. Similarly, H/C.R. sheets/strips/coils/plates shrank 2.91pc.

The production of rubber products declined by 3.39pc, non-metallic minerals by 15.05pc and electrical equipment by 21.38pc.

Published in Dawn, December 17th, 2024