LSMI output dips 7.06pc in Aug

ISLAMABAD     –    The large-scale manufacturing index (LSMI) had shrunk for nine months in a row after recording negative growth of over seven percent in August this year, which indicates that economic activities had slowed down in the country. 

The LSMI had shrunk by 7.06 percent in August 2019, the Pakistan Bureau of Statistics (PBS) reported on Wednesday. Meanwhile, the PBS data showed that LSMI has declined by 6.04 percent in two months (July and August) of the current fiscal year. The large-scale manufacturing output had declined for nine months in a row amid sluggish economic activities in the country.

The official data showed that growth in big industries like food, beverages, pharmaceutical, chemical, fertilisers, leather and iron, automobiles and steel sectors had declined in first two months of the ongoing fiscal year. Economic experts believed that decline in production of big industries would result in massive layoffs across the industrial sector, which would increase the unemployment rate in the country.

The government had set LSM target of 3.1 percent for the year 2019-20. However, the large-scale manufacturing sector is continuously showing negative growth. According to the PBS, production data of 11 items from Oil Companies Advisory Committee had registered a negative growth of 0.66 percent in July and August 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 4.89 percent during first two months of this financial year. However, the data provided by the provincial Bureaus of Statistics for 65 items had recorded negative growth of 0.98 percent over the same period.

The negative growth is mainly the outcome of dip in production of automobiles that went down by 30.26 percent and wood products by 32.97 percent. Similarly, production of coke and petroleum products had declined by 17.77 percent. Meanwhile, production of iron and steel products had decreased by 16.58 percent, followed by pharmaceutical, whose production declined by 14.36 percent. Production of food, beverages and tobacco had also gone down by 12.62 percent. The data showed that production of chemicals decreased by 8.3 percent and paper and board production also down by 3.68 percent.

Meanwhile, according to the PBS data, electronic products had recorded growth of 37.85 percent; fertilizers 15.99 percent, engineering products 23.33 percent and rubber products had also recorded growth of 2.03 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 37.37 percent, light commercial vehicles 20.27 percent, trucks 59.22 percent, jeeps and cars 31.67 percent and motorcycles 20.25 percent during the period under review.

In the non-metallic mineral products, cement dipped 5.03 percent 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, and tea blended dipped by 6.7 percent and 31.63 percent, respectively. However, vegetable ghee production increased by 2.14 percent on a year-on-year basis.

 

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