ISLAMABAD: The country’s large-scale manufacturing output shrank for fifth month in a row, raising fears of massive layoffs across the industrial sector.
The LSM index dipped by 7.06 per cent in the second month of this fiscal year from a year ago, the Pakistan Bureau of Statistics (PBS) reported on Friday.
In comparison, the index had contracted by the first month of current fiscal year, LSM index shrank by 3.28pc while it fell 6.04pc year-on-year between July and August.
In 2018-19, the three LSM sectors recorded a decline of 3.64pc against the target growth of 8.1pc, which the government has set at 3.1pc for 2019-20.
The decrease in LSM was mainly led by a dip of 14pc in petroleum products, followed by 12.82pc in automobile sector, 12.58pc in non-metallic minerals, 9.96pc in fertilisers, 9.81pc in pharmaceuticals, 5.63pc in chemicals, 5.43pc in engineering, 5.10pc in iron and steel and 0.08pc in textile sector.
Sector wise, production data of 11 items under the Oil Companies Advisory Committee registered decrease of 0.66pc, whereas 36 items under the Ministry of Industries and Production shrank by 4.89pc and 65 items by Provincial Bureaus of Statistics 1.5pc.
The lacklustre performance in the industrial sector reflects the overall economic slowdown across various sectors in the ongoing fiscal year.
LSM constitutes 80pc of manufacturing and 10.7pc of the overall GDP. In comparison, small-scale manufacturing accounts for just 1.8pc of GDP and 13.7pc in manufacturing.
Data reveals 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 impact was more noticeable in the construction-allied industries as demand for housing moderated amid rising building materials’ prices and higher cost of financing. Certain sector-specific issues also contributed to the decline in LSM.
Automobile prices witnessed multiple upward revisions due to currency depreciations, which kept potential buyers at bay. On a yearly basis, the auto sector registered sales decline in almost all variants during the second month of this fiscal year. The production of tractor dipped by 36.3pc, trucks 58.8pc, buses 38.38pc, jeeps and cars 41.71p, LCVs 10.76pc and motor cycles 12.86pc.
Pharmaceutical sector also suffered due to a considerable lag in regulatory adjustments in prices, which in addition to the weakening of local currency added to the distress of an import-dependent sector. As a result, the production of syrups declined by 36.82pc, tablets 4.95pc, capsules 2.9pc and injections 7.49pc.
Similarly, lower sugarcane production and carry forward from last year’s inventories further dampened the prospects of sugar industry. In the non-metallic mineral products, cement production was down by 12.12pc in August.
Moreover, production of cooking oil, and tea blended fell by 9.71pc and 35.86pc, respectively. However, vegetable ghee production increased by 0.66pc in August FY19 on a yearly basis.