ISLAMBAD    -       The large-scale manufacturing index (LSMI) declined by 7.97 percent during October of the current fiscal year, reflecting overall economic slowdown across various sectors in the ongoing fiscal year.

The LSMI had shrunk by 6.48 percent in the first four months (July to October) of the current fiscal year, the Pakistan Bureau of Statistics (PBS) reported. The LSM, which constitutes 80 percent of manufacturing and 10.7 percent of the overall GDP, had recorded negative growth for eleventh months in a row amid sluggish economic activities in the country.

The official data showed that growth of big industries like food, beverages, pharmaceutical, chemical, fertilisers, leather and iron, automobiles and steel sectors had declined in first four months of the ongoing fiscal year. Data reveal various factors that led to the slowdown including lower Public Sector Development Programme expenditures compared to last year, deceleration in the private construction activities and consumer spending on durable goods.

The government had set LSM target of 3.1 percent for the year 2019-20. However, the government might not achieve the LSM growth target due to the performance of major industries in first four months of the current fiscal year. According to the PBS, production data of 11 items from Oil Companies Advisory Committee had registered a negative growth of 0.91 percent in July to October period of the year 2019-20. Similarly, the LSM data, provided by the Ministry of Industries and Production for 36 items, had also shown negative growth of 3.99 percent during the period under review. However, the data provided by the provincial Bureaus of Statistics for 65 items had recorded negative growth of 1.57 percent over the same period.

The negative growth is mainly the outcome of dip in production of automobiles that went down by 36.07 percent and iron and steel products by 14.97percent. Similarly, production of coke and petroleum products had declined by 13.77 percent. Meanwhile, production of pharmaceutical had decreased by 10.28 percent, followed by electronics, whose production declined by 8.87 percent. Production of food, beverages and tobacco had also gone down by 8.4 percent. The data showed that production of chemicals decreased by 8.84 percent and paper and board production also down by 2.21 percent.

Meanwhile, according to the PBS data, wood products had recorded growth of 60.14 percent; fertilizers 10.71 percent, engineering products 8.33 percent and leather products had also recorded growth of 7.74 percent during the period under review.

On a year-on-year basis, almost all vehicles in the auto sector posted decline in previous fiscal year. Policy measures like regulatory restrictions prohibiting non-filers from purchase of vehicles, and increase in interest rates dented the demand in the automobile segment to some extent. Furthermore, significant depreciation of PKR increased the cost of production, resulting in escalated prices and dampening the demand further. In auto sector, tractor production went down by 33.67 percent, light commercial vehicles 27.69 percent, trucks 57.87 percent, jeeps and cars 43.49 percent and motorcycles 19.19 percent during the period under review.

In the non-metallic mineral products, cement production remained unchanged in the period under review. The cement sector has been going through a major expansionary phase in recent years, mirroring the increase in economic activity in the country. Moreover, production of cooking oil had increased by 2.4 percent, and tea blended dipped by 20.15 percent. However, vegetable ghee production increased by 3.81 percent on a year-on-year basis.