The Large-Scale Manufacturing (LSM) data for August 2025 is out, and the euphoria of last month has all but fizzled. There are two camps reading the LSM numbers differently. There is still positive growth, which the glass-half-full camp sees as signs of resurgence. And there is good reason, too.
Positive year-on-year cumulative LSM growth has been a rare commodity of late — only six such instances in thirty-eight months. The cumulative index value now stands slightly higher than the all-time highs of FY22. So, why shouldn’t one find reason to take heart in the latest readings?
If you are in the other camp (and many are), read the opening paragraph again. Six positive readings in thirty-eight months. Let that sink in. This is a story of an extraordinary spell of industrial stagnation — not just a few bad months here and there. Look no further than August’s own numbers. Year-on-year growth has slowed to just 0.5 percent — the weakest since March 2025.
The August index value remains below FY22 levels, reminding everyone that despite a strong July, the sector still hasn’t climbed back to its pre-slump peak. The breadth of growth, which had shown encouraging signs last month, has already narrowed. Ten of the 22 LSM sub-sectors posted negative growth — up from seven in July — taking the LSM right back to where it hovered through most of FY25.
The contrast between July and August is telling. July had been celebrated for being the strongest month in three years, with 16 sectors in the green and the highest-ever July index reading. That optimism was built on stellar performances in garments, automobiles, cement, and furniture, which together drove most of the overall growth. But August peeled away some of that shine — and by September, the burden of recovery had shifted further.
For the first time in many months, wearing apparel was not the largest contributor to positive growth, slipping down to the fourth spot. Tracked closely by readymade garment exports, the sector grew a little under 5 percent year-on-year on a cumulative basis for 2MFY26. But with September 2025 export quantities flattening to just 0.01 percent growth, LSM for September will likely have one less shoulder to carry the burden.
Automobiles have now taken the mantle, accounting for nearly two-fifths of all positive LSM growth, with a remarkable 90 percent year-on-year increase for 2MFY26. September numbers are reportedly strong as well, though the pace is expected to moderate to around 70 percent. Cement remains the other turnaround story.
Utilization levels have picked up meaningfully in recent months, and September’s performance is believed to have carried forward the momentum of the first two months. On the food front, palm oil and grain milling have been the biggest contributors, with palm oil production expected to stay strong into September given continued import momentum.
Meanwhile, the heavyweight textile sector, which carries the largest index weight at 18 percent, continues to offer nothing to cheer about. It remains deep in the red, with its index staying below 100 for a staggering 35 consecutive months.
The sector’s output is now lower than what it was a decade ago — a statistic that says more about Pakistan’s industrial erosion than any year-on-year growth percentage can. And textile isn’t alone. A staggering 10 of the 22 LSM sectors are operating at output levels lower than those recorded ten years ago.
The story, therefore, lies in both progress and persistence of weakness. On the one hand, cumulative 2MFY26 growth at 4.4 percent marks the best start to a fiscal year in recent memory — a sign that some parts of industry are stirring back to life.
On the other hand, half of all LSM subsectors remain trapped below their FY16 output levels. The base has eroded, the structure hollowed, and even with intermittent upticks, the industrial clock is still set years behind.
The split in sentiment is understandable. For the optimists, two consecutive months of positive growth and record-high cumulative index readings mark a slow but steady turnaround. For the realists, this is still an industry trying to crawl out of a crater — where every small rise looks bigger than it actually is.
August didn’t erase July’s gains, but it did puncture the illusion of a sustained rebound. The momentum hasn’t vanished, but it’s fragile — and easily lost. Without consistent follow-through from policy and energy reforms, the LSM may continue to do what it’s done for years now: move just enough to stay alive, but never enough to really recover.