Data released by the Pakistan Bureau of Statistics on Friday reveals a contraction in large-scale manufacturing (LSM) in October, marking a 4.08 percent decline year-on-year.
This downturn follows two consecutive months of growth. Key contributors to the negative growth include the textile, paper and board, iron and steel products, electrical equipment, automobiles, and furniture sectors.
The LSM had shown signs of recovery in August after enduring 14 months of contraction, and the positive trend continued in September. The opening for letters of credit (LCs) since July 1, along with removing import restrictions, clearance of outstanding LCs, and improved dollar liquidity due to an increase in State Bank of Pakistan forex reserves, were expected to stimulate economic activity.
However, in October, 13 out of 22 sectors experienced negative growth in LSM, with notable contractions in beverages (-8.16%), wearing apparel (-1.83%), petroleum products (-8.19%), non-metallic mineral products (-12.03%), electrical equipment (-17.32%), tobacco (-37.16%), and transport equipment (-10.69%).
The overall contraction in LSM stood at 0.44 percent for the first four months of the current fiscal year compared to the same period of last year.
The textile sector witnessed major negative growth, particularly in yarn (3.74%), cloth (5.90%), and garments (1.83%) in October. The food group saw a decline in wheat and rice production by 5.02%, while cooking oil production rose by 18.39%, blended tea by 13.37%, and vegetable ghee by 5.20%.
In the petroleum sector, a negative growth of 8.9% was recorded in October, driven by declines in petrol (14.88%), high-speed diesel (9.68%), and LPG (1.92%). However, kerosene grew by 39.27%.
October also witnessed a decline in iron and steel production by 1.56% and electrical equipment by 17.20%. Fertilizers and rubber items production experienced growth of 8.81% and 9.77%, respectively, while pharmaceutical products surged by 26.56%.
The auto sector faced a substantial 58.31% slump in October, affecting the production of various vehicles. The finance ministry attributed the subdued performance of the auto industry in July-October FY24 to significant increases in input prices and tightened auto finance.
Car production and sales decreased by 52.8% and 47.4%, while truck and bus production and sales decreased by 54% and 45%. However, tractor production and sales increased by 55.1% and 86.8%.
Overall, the sales of petroleum products slumped by 18% to 5 million tonnes in 4MFY24, compared to 6.2 million tonnes in the same period last year. In October, oil sales recorded a 24% year-on-year decline, totaling 1.3 million tonnes.
