LSM output for the month of October has managed to grow by 2.46 percent over last year, according to data compiled by Pakistan Bureau of Statistics.
Overall, The Quantum Index Numbers of Large scale manufacturing at the end of the 1QFY13 shows a small growth, standing at 106.04 points, against 104.02 points during the July-October period last year.
While a number of weighty sub-sectors in the LSM basket continue to churn out ailing production figures, spear heading growth in the first quarter of FY13 were all the usual suspects- Food and Beverages aided by Tobacco, Iron and Steel, Paper and Board as well as Coke and Petroleum products, which cumulatively lent to an overall 1.95 percent uptick in the production output from the local LSMI.
The textile sector, with the greatest weight age of 20.91 percent, on the other hand, managed to muster up a very slight increase of 0.45 percent in the October, with the production figures for cotton yarn and cotton cloth during the first quarter showing a decrease of 0.25 and 0.17 percent respectively year-on-year.
Despite growing demand for both Pakistani textile products in the international market, these modest growth figures indicate a dearth of proper policy-making that could lead to a better utilisation of the sectors potential.
However, many analysts are considering the 50 bps policy rate cut announced by the State Bank of Pakistan (SBP) in its monetary policy as a factor which will greatly help the export-oriented textile industrial sector, with the decline in interest rates helping to slice off the sectors cost of doing business.
Moreover, the sectors production figures are all set to get better in time for the PBSs next LSM update, as export data compiled by PBS for the month of September shows a volumetric increase of 45.8 percent for the sector, with the country exporting cotton yarn worth 201.6 million dollars during the last month alone, with demand from China helping revive local production of low value added produce.
On the automobile front, the news remains subdued, as production remains depressed on account of dwindling sales. Car sales have reportedly plunged by 32 percent during 1QFY13 on an year-on-year basis with total sales hovering around 34,990 units as against 51,755 units during the same period last year.
Consequently, the sectors production figures during the first quarter of FY13 have shrunk drastically by 9.68 percent over the same period last year.
Additionally, the production figures for November are set to lend an even bigger blow to the overall LSM production as car sales during the month of October hit a 16-month low of 8,184 units as compared to 13,690 during October FY12.
Another industry which continues to leach away from the LSMIs growth is the fertilizer industry, which has had to bear the brunt of an 18.99 percent negative growth in production during 1QFY13.
Production figures from the sector have remained stagnated as cheaper imports continue to flood the market, while the country sits on a record inventory of urea- currently reported to be hovering around the one million ton mark.
Additionally, winter termination of gas supply to the fertilizer industry and lower demand on account of higher urea prices is very likely to mean that the sectors production figures are very likely to remain subdued within the next few months.
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Manufacturing items Weight Growth %
Oct-12 Jul-Oct 12
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Food/Beverages & Tobacco 12.73 8.15 7.64
Iron & Steel products 5.39 3.34 12.81
Fertilizers 4.44 13.78 -18.99
Electronics 1.96 11.41 -6.91
Textile 20.91 0.45 -0.26
Automobiles 4.61 -27.99 -9.68
Coke & Petroleum products 5.51 19.42 7.21
Pharmaceuticals 3.62 1.12 4.14
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Source: PBS
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