ISLAMABAD: With the economic slowdown in the country, the negative growth in Large Scale Manufacturing (LSM) continued for the fifth consecutive month as it posted a 5.49 % decline in November 2022.
What is the Quantum Index for Large Scale Manufacturing?
Quantum Index of Manufacturing (QIM) measures the changes in production of Large Scale Manufacturing Industries (LSMI) overtime, on a monthly as well as cumulative basis. The weights presently used for the QIM were derived from the Census of Manufacturing Industries (CMI) 2005-2006.
How badly did the LSMI Perform over the Fiscal year?
As per the data released by Pakistan Bureau of Statistics (PBS) the overall output of the LSM sector declined by 3.58% during the first five months (July-November) of 2022-23 when compared with the same period of the previous year.
According to the Provisional Quantum Index Numbers (QIM) of Large Scale Manufacturing Industries (LSMI) released on Tuesday, LSMI output decreased by 5.49% for November 2022 when compared with November 2021 but increased by 3.55% when compared with October 2022.
The QIM estimated for July-November 2022-23 is 111.41, and for November 2022 is 112.30.
As per the LSM data with base year 2015-16 the main contributors towards decline are food (-1.02), tobacco (-0.57), textile (-2.47) garments (4.46), petroleum products (-1.02), cement (-1.16), pharmaceuticals (-1.34), and automobiles (-1.27).
The sectors showing growth during July-Nov 2022-23 compared to July-Nov 2021-22 are wearing apparel (51.48%), leather products (8.18%), electrical equipments (1.06%), furniture (99.29%) and other manufacturing (football) (59.69%).
The decline in LSM comes as Pakistan’s economy has crumbled alongside a simmering political crisis, with the rupee plummeting and inflation at decades-high levels, while devastating floods and a major shortage of energy have piled on further pressure.
During the period from July-November, 2022 the sectors showing growth included clothing 4.46 %, leather products 0.06 %, electrical equipment 0.04 percent, furniture 1.53% while other manufacturing grew by 0.17%.
Meanwhile, the sectors showing a decline during the period under review included food 1.022%, beverages 0.26%, tobacco 0.57%, textile 2.47% wood products 0.05, paper and board 0.07%, coke and petroleum products 1.02%, chemicals 0.06%, pharmaceuticals 1.34%, rubber products 0.02%, no metallic mineral products 0.95%, iron and steel products 0.04%, fabricated metal 0.09%, wood products 0.05%, machinery and equipment 0.24%, automobiles and other transport equipment 1.27 and 0.36 % respectively.
It may be mentioned here that the decline in growth of LSM started in July 2022 when the LSM growth contracted by 1.9 percent. Similarly it declined by around 1 percent in August and 3 percent in September. In October 2022 it declined by 8 percent.
The deceleration in industrial output during the current fiscal year indicates that economic growth will slip further in the next quarter. As per the experts the third quarter will be more disturbing owing to expected electricity/gas tariff hike and suspension of gas supplies to industrial units in winter.
Economists have been raising concerns about a slowdown caused by record energy and raw material prices. Moreover, export-based manufacturers have already hinted at a decline in their productions due to higher cost of energy and other inputs.
