Latest production numbers released by the Federal Bureau of Statistics confirm that recovery is indeed taking place in the economy; though at different pace in different sectors.
In the construction industry, cement output rose by 11.23 percent to a little more than 22.7 million tons in the first nine months of current fiscal year.
Production of glass plates and sheets, however, continued to falter - down 12.73 percent during the period. Hopefully, as construction of newly erected structures nears completion, the demand for glass and paints will also pick up.
Corresponding to the growth in farming sector, the production of both phosphate and nitrogen fertilisers is up in the nine-month period. So is automobile manufacturing. Official data show that production of jeeps & cars rose by a whopping 36 percent whereas that of tractors increased by 26.8 percent.
But LSMs move forward comes mainly on account of relatively smaller industries - such as footwear, soaps, bicycle tyres etc - because other - much bigger industries have, by and large, lagged behind.
The production of cotton yarn, which has one of the heaviest weights in the LSM index, was down 1.76 percent in the first three quarters, while that of cotton cloth managed to grow just 0.44 percent.
While cotton and textile industry remained caught up in yarn and raw export imbroglio, the consumer stood on the sidelines on account of itchy inflation. As a result, production of most items under food, beverages and tobacco were sharply lower in 9MFY10 compared to the year ago period.
Likewise, major inputs of paper, textile and soap industry, caustic soda and sulphuric acid fell by 22.47 percent and 17 percent respectively.
Though, iron and steel output has picked up from its bottom in July 2009, nine-month data reveal a drop of 13.74 percent over the same period a year ago. The graph shows how long would it take for the industry to achieve its pre-slowdown production levels.
In short, while the recovery is a sign of relief, there is no reason to be excited just yet.
Petroleum industry is still down suffering from circular debt, which explains the 6 percent output drop in the nine month period. Since the circular debt crisis is likely to persist in the foreseeable future, the fate of POL producing industry appears to be in shambles.
In addition, there are fears that the implementation of VAT will result in under-invoicing which may result in lesser documentation of industrial production. VAT, being tipped as inflationary is also seen keeping the consumer on a retreat - which in turn can hurt producers confidence.
So be merry and enjoy the recovery as long as the low base affect is working in favour, but be wary for the party might be over pretty soon.
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