Industrial production of LSM sector declined in July 2021

Large Scale Manufacturing sector recorded 4.9% negative growth in July 2021

 

The data released by Pakistan Bureau of Statistics (PBS) on Wednesday shows that the large-scale manufacturing (LSM) sector contracted 4.9% in July 2021 over the preceding month. The data for July was disappointing for the government as it was expecting better results.

The government was expecting better growth in the LSM as it believed that economy is growing at fast pace. But July data is indicating that economy recovery is not on solid grounds as claimed by the government.  

According to this report by PBS, three reporting sources - the Oil Companies Advisory Committee (OCAC), the federal Ministry of Industries and the Provincial Bureaus of Statistics - reported an overall negative growth in the production by industries that they monitored in July over June this year.

The OCAC reported a contraction of 0.3%, the Ministry of Industries put the negative growth at 3.9% and the provincial bureaus showed a negative growth of 0.7% in July over June this year, according to the national data collecting agency.

As a result, the LSM sector recorded a negative growth of 4.9% in July - the first month of current fiscal year 2021-22. According PBS data, The LSM index dropped to 138, which was the lowest point in the past 10 months.

According to PBS data, on a year-on-year basis, there was a growth of 2.3% in July over the same month of previous fiscal year. The year-on-year growth was, however, not in line with the annual LSM growth target of 6% for the current fiscal year.

LSM had posted a growth of 14.9% in the last fiscal year. The ministry of finance claimed that the high growth in LSM is the result of its successful policies like “subsidised energy tariffs for industries, construction package, and relaxation in tariff rates for export-oriented industries and low borrowing costs by SBP”.

According to the PBS data, on a year-on-year basis, out of 15 major industries, 11 saw a moderate growth of less than 1%; while 4 industries faced stagnation as there was hardly any growth in the production.

 The output of four industries showed a contraction in the first month of financial year 2021- 22 compared to the same period of previous fiscal year. The industrial sector has a major contribution in tax collection and the sector’s share in revenue is almost triple than its contribution to the overall economic output.

Data collected by the OCAC showed that 11 types of industries contracted a cumulative 0.2% in the first month of current fiscal year over a year ago.The Ministry of Industries, which monitors 15 industries, reported a marginal 0.9% growth in the LSM output in July. Provincial bureaus reported a cumulative growth of 1.6% in 11 industries.

The industrial sectors that posted growth included textile that grew a mere 0.4%, fertiliser rising 0.2% whereas the food, beverages and tobacco group recorded 0.09% growth.The manufacturing output of chemical products increased 0.4% whereas the pharmaceutical sector registered a growth of 0.9%.

The automobile sector grew 2.1%, which was also the highest growth rate by any sector in the first month of FY 2021-22.Iron and steel products’ output rose a mere 0.4%, electronics 0.05%, leather products 0.1% and engineering products 0.01%. Wood products showed a flat growth.

Industries that registered a dip in manufacturing included coke and petroleum products with 0.2% contraction, non-metallic mineral products that showed a negative 1.5% growth, paper and board with 0.3% contraction and rubber products with a decline of 0.1%.

                                                                Economic correspondent