Pakistan’s Large-scale manufacturing (LSM) sector experienced a year-on-year contraction of 1.09 percent in the first month (July) of the current fiscal year 2023-24, according to data from the Pakistan Bureau of Statistics (PBS). July saw a steeper month-on-month decline of 3.62 percent.
For FY23, LSM reported a year-on-year contraction of 10.26 percent, in contrast to the previous fiscal year, FY22, when it witnessed growth of 11.7 percent year-on-year. These production estimates for LSM industries are based on the new base year of 2015-16.
The decline in industrial production can be attributed primarily to reduced activity within the textile and clothing sectors, particularly those geared towards exports. This negative trend in LSM production has persisted since August 2022.
A significant consequence of this decline is the substantial loss of jobs across major industries during FY23, primarily due to reduced production capacity. This situation has led to hundreds of individuals facing unemployment.
These statistics highlight the considerable challenges facing Pakistan’s manufacturing sector, raising valid concerns about the nation’s economic outlook for the upcoming months.
In July, production declined in 16 sectors, while only eight sectors showed modest growth.
The textile sector, in particular, recorded a significant 22 percent decline in July compared to the previous year. Notably, negative growth was observed in the yarn (29.88 percent) and cloth (17.52 percent) subsectors. However, there was some nominal growth in the production of other textile products, and the production of garments increased by 30.84 percent in July.
Within the food group, wheat and rice production increased by 6.91 percent, cooking oil production rose by 22.84 percent, vegetable ghee production increased slightly by 0.29 percent, and blended tea production grew impressively by 46.58 percent.
The petroleum products sector faced a negative growth rate of 2.26 percent in the first month of 2023-24, primarily due to a decline in the production of petrol and high-speed diesel, while nearly all other petroleum products also experienced a slowdown, except for solvent naptha, diesel oil, and certain other petroleum products.
The auto sector saw a significant 66.11 percent decline in July, as the production of nearly all types of vehicles experienced a downturn. During the same period, iron and steel production decreased by 2.66 percent, and the production of electrical equipment witnessed a significant drop of 22.38 percent.
The production of fertilizers experienced a significant surge of 26.06 percent, and the production of rubber items also witnessed substantial growth, with an increase of 10.24 percent. Pharmaceutical products experienced an impressive surge, with a substantial increase of 54.22 percent.