ISLAMABAD - The large-scale manufacturing (LSM) sector shrank by 3.8 per cent during May 2019 from a year ago, indicating economic activities had slowdown in the country.

The LSM growth had declined by 3.5 percent in eleven months (July-May) period of the fiscal year 2018-19 as compared to the corresponding period of previous year, according to the data released by Pakistan Bureau of Statistics (PBS) on Wednesday. The underwhelming industrial performance was primarily attributed to cuts in Public Sector Development Programme (PSDP) spending. Moreover, it reflected the impact of factors such as monetary policy tightening, exchange rate adjustments, regulatory measures, and uncertainty among certain quarters of the business community regarding the future path of economic policies, which set the tone for the broader economic slowdown.

Sector-wise, production data of 11 items from Oil Companies Advisory Committee registered a negative growth of 0.45 percent. Similarly, the LSM data, provided by the Ministry of Industries and Production for 36 items, showed negative growth of 2.93 percent during the first eleven months of the FY2019 over a preceding year. However, the data provided by the provincial Bureaus of Statistics for 65 items showed nominal decline of 0.12 percent over the same period.

The negative growth is mainly the outcome of dip in production of iron and steel products 10.78 percent, automobiles 11.2 percent, pharmaceutical products 6.98 percent, followed by food and beverages & tobacco 7.04 percent and coke & petroleum products 7.13 percent. Similarly, other sectors including chemicals included negative growth of 3.85 percent and non metallic mineral products 3.29 percent and paper and board down by 3.43 percent.

Meanwhile, wood products recorded growth of 15.14 percent, electronics 18.2 percent, engineering products 7.64 percent, fertilizer 6.97 percent and rubber products had also recorded growth of 3.38 percent during the period under review.

On a year-on-year basis, almost all vehicles in the auto sector posted decline in July to May period. Tractor production went down by 31.21 percent, light commercial vehicles 16.19 percent, trucks 32.43 percent, jeeps and cars 5.32 percent and motorcycles 12.52 percent during the period under review. 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 the non-metallic mineral products, cement dipped 3.88 percent in July to May period over same month last year. The sugar production has dipped by 26.49pc during the month under review. The decline may have been greater had it not been for cement exports, which partially offset the weakness in domestic demand. The cement sector has been going through a major expansionary phase in recent years, mirroring the increase in economic activity in the country.

Sugar production fell 18.34 percent to 5.353 million tons in the July-May 2018/19, while in May 2019, its production decreased by 76.69 percent over same month of last year. Cotton yarn production increased by 0.02 percent to 3.145 million tons in these eleven months, and in May it increased by 0.3 percent.