ISLAMABAD: The country's large-scale manufacturing production declined for the fifth consecutive month, which increases the fear of mass layoffs throughout the industrial sector.
The LSM index fell 7.06 percent in the second month of this fiscal year from a year ago, the Pakistan Bureau of Statistics (PBS) reported Friday.
In comparison, the index had contracted in the first month of the current fiscal year, the LSM index contracted at 3.28pc while it fell 6.04pc year-over-year between July and August.
In 2018-19, the three sectors of LSM registered a decrease of 3.64 pcs against the target growth of 8.1 pcs, which the government has set at 3.1 pcs for 2019-20.
The decrease in LSM was mainly led by a fall of 14pc in petroleum products, followed by 12.82pc in the automotive sector, 12.58pc in non-metallic minerals, 9.96pc in fertilizers, 9.81pc in pharmaceuticals, 5.63pc in chemical products , 5.43pc in engineering, 5.10pc in iron and steel and 0.08pc in textile sector.
Regarding the sector, the production data of 11 articles under the Oil Company Advisory Committee registered a decrease of 0.66pc, while 36 articles under the Ministry of Industry and Production were reduced by 4.89pc and 65 articles by the Provincial Offices of 1.5pc statistics.
Mediocre performance in the industrial sector reflects the general economic slowdown in several sectors in the current fiscal year.
LSM constitutes 80pc of manufacturing and 10.7pc of total GDP. In comparison, small-scale manufacturing represents only 1.8pc of GDP and 13.7pc in manufacturing.
The data reveal several factors that led to the slowdown, including lower expenses of the Public Sector Development Program compared to last year, the slowdown of private construction activities and consumer spending on durable goods.
The impact was most noticeable in the industries allied to construction, as the demand for housing moderated amid rising prices for construction materials and the higher financing cost. Certain sector-specific problems also contributed to the decrease in LSM.
Car prices witnessed multiple upward revisions due to currency depreciations, which kept potential buyers at bay. Annually, the automotive sector registered a decrease in sales in almost all variants during the second month of this fiscal year. The production of tractors submerged in 36.3pc, trucks 58.8pc, buses 38.38pc, jeeps and cars 41.71p, LCVs 10.76pc and motorcycles 12.86pc.
The pharmaceutical sector also suffered due to a considerable delay in regulatory price adjustments, which in addition to the weakening of the local currency added to the anguish of an import-dependent sector. As a result, syrup production decreased by 36.82pc, 4.95pc tablets, 2.9pc capsules and 7.49pc injections.
Similarly, the lower production of sugarcane and the advance of inventories last year further attenuated the prospects of the sugar industry. In non-metallic mineral products, cement production fell by 12.12 percent in August.
In addition, the production of cooking oil and mixed tea decreased by 9.71pc and 35.86pc, respectively. However, vegetable shortening production increased by 0.66pc in August of FY19 annually.
Posted on Dawn, October 24, 2019
Source: https://www.dawn.com/news/1512657/big-industry-contracts-over-7pc-in-august