Pakistan large-scale manufacturing grows 1.8% in March

Pakistan's large-scale manufacturing (LSM) grew 1.8% in March, marking a return to positive growth after four consecutive months of decline.

However, it declined on a month-on-month basis, according to Pakistan Bureau of Statistics data.

Last year, large-scale manufacturing was down due to the increase in energy costs, resulting in inflation-led demand suppression and a reduction in economic activity.

A report by JS Global said that the LSM sector experienced negative growth for the third consecutive year. In nine months of fiscal year 2023 the drop was 6.9%, followed by a 0.2% decrease in 9MFY24, and another 1.5% YoY decline in 9MFY25.

Negative growth in March for sectors like non-metallic minerals (-5%), cement (-6%), and iron and steel (-4%) reflects ongoing challenges within the sectors and their respective downstream industries.

Improvement was witnessed in some pivotal sectors during March. Textiles (18.16% weight) and food (10.69% weight) posted solid YoY growth of 5.2% and 20.1%, respectively, making significant contributions due to their larger weights.

Within food, wheat, which has the highest weight, reported an increase of 8.1%.The automobile sector recorded a strong 19% YoY growth; however, due to its lower weight in the LSM index, its overall impact remained modest.

Large-scale manufacturing growth has faced challenges due to consolidation efforts in recent times where high energy costs and subdued consumer demand both locally and internationally added further burden on the manufacturing sector, the JS report said.

The brokerage house report observed that a declining inflation trend creates a favorable environment for LSM growth by reducing input costs, enhancing demand, and stabilizing production. The degree of LSM growth will depend on how quickly manufacturers can capitalize on these improved conditions. Recent rate cuts, driven by declining inflation are expected to enhance growth prospects for the Large-Scale Manufacturing sector