In what can be seen as a big sign of relief, large scale manufacturing output finally turned positive in October. Official data shows that LSM index grew 4.97 percent in October year-on-year - its biggest reading in more than eighteen months.
Growth for the Jul-Oct period, however, does not present an extremely exciting picture, as the LSM index edged just 0.67 percent higher year-on-year from 0.65 percent decline in the first quarter. The stability in numbers comes mainly due to noticeable increases in the production of automobiles, cement, select food items such vegetable ghee and agri-related industries such as fertilizer, which grew sharply during the period.
One industry which, ironically, is still lagging is cotton. Data released by Federal Bureau of Statistics reveals that average production of cotton yarn actually eased by about two and half percent during Jul-October, while that of cotton cloth also remained flat. This, despite the lower base affect - considering the economy was worse off about the same time last year - and the bumper cotton crop harvested this season raises serious concerns.
Two other industries persistently showing falling output include producers of petroleum goods and that of iron and steel - implying continued burden on external imbalances ahead.
In addition, this anomaly questions the priorities of the country. At one end Pakistan is exporting raw cotton and cotton yarn - up 68 percent and 43 percent in Jul-Oct - instead of capitalizing on the bumper crop; and at other, the country is decreasing its already-thin reliance on domestic production of steel and petroleum goods - both of which form a base for both large and medium scale manufacturing. Need one say more.
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KEY INDUSTRIAL BASE DATA
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July-Oct (FY08) July-Oct (FY09) July-Oct (FY10)
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Cotton yarn (MT) 989,168 984,986 963,145
Cotton cloth (000 Sq M) 342,750 340,442 338,050
Vegetable ghee (000 litres) 392,342 341,844 346,445
Petroleum products (000 litres) 4,798,799 4,513,169 3,998,076
Cement (000 MT) 8,618 8,736 10,409
Jeeps and Cars (# of units) 60,582 34,838 37,454
Iron & Steel products (MT) 3,052,918 2,148,595 1,731,147
Fertilizers (MT) 959,471 1,019,623 1,034,241
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Source: FBS