Big industry contracts 3.4pc in seven months

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ISLAMABAD: The Pakistan Bureau of Statistics on Wednesday reported that growth in the large-scale industries has contracted by 3.37pc in the first seven months (July-Jan) of the current fiscal year (FY20), as compared to the corresponding period of last year.

Sources attribute this drop to low demand, which was adversely affected by the rising cost of production and working capital.

According to the provisional quantum index numbers, LSMI output on a year-on-year basis decreased by 5.96pc during the month of January 2020, when compared with the same of last year.

However, on a month-on-month basis, the industrial sector output in the country witnessed about 7.09pc growth in January 2020 when compared with December 2019.

The provisional quantum indices of LSMI for Jan 2020, with base year 2005-06, have been developed on the basis of latest data supplied by the source agencies.

According to the data, out of 15 major industries, 10 recorded some growth while the output in five industries contracted in the July-January FY20 period.

Data collected by the Oil Companies Advisory Committee (OCAC) showed that except for jute batching oil, which recorded a slight growth, 10 industries registered 0.46pc to 70pc negative growth in the July-January period.

The production of 11 items under the OCAC went down by 10.59pc, 36 items under the Ministry of Industries and Production dipped by 3.12pc while 65 items reported by the Provincial Bureaus of Statistics fell 2.36pc.

Seven industries in the manufacturing sector, including coke & petroleum products, pharmaceuticals, chemicals, automobiles, iron & steel products, electronics and engineering products, registered negative growth during the period under review.

However, manufacturing industries that showed a nominal increase included textile, food & beverages, non-metallic mineral products, fertilizers, leather products, paper & board, rubber products and wood products.

Meanwhile, the production of LPG dipped by 0.46pc, furnace oil by 4.07pc, jet fuel -27.14pc and kerosene -23.84pc during the month under review. The drop in furnace oil production was due to its declining share in power generation.

The auto sector, which has witnessed a massive decline in sales over the last few quarters, saw multiple upward price revisions due to currency depreciation, which kept potential buyers at bay. On a yearly basis, the sector’s sales decreased in almost all variants in February 2020. The production of tractors dipped by 59.22pc, trucks by 36.31pc, buses -37.7pc, jeeps and cars -43.7pc, LCVs -74.4pc and motorcycles -2.33pc.

The production of sugar declined by 1.88pc and cement 5.03pc, respectively. 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 3.41pc, capsules 26.67pc and injections 6.25pc. However, the production of tablets increased by 0.84pc.

Moreover, production of cooking oil and vegetable ghee went up by 4.91pc and 5.18pc, respectively.

It may be noted that despite economic slowdown, growing poverty and unemployment, the SBP only slashed the key policy rate by 75 basis points in its last monetary policy announcement.

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 the secondary sector.

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