Pakistan’s automobile sector saw 72% production growth in July

The production levels of automobile sector grew by 72% in July compared to the same month a year ago, according to the Large-Scale Manufacturing Industries (LSMI) numbers issued by Pakistan Bureau of Statistics on Monday.

Factors such as revival in demand followed by stability in currency, global oil prices and continuation of interest rate reversal cycle can be attributed for improved production levels.

To recall, the automotive industry saw a 60% surge in sales to 8,600 units in July compared with same month last year.

Pakistan Bureau of Statistics reported a 2.4% increase in the July production levels. The LSMI Index was recorded at 106.26, up from 103.7 recorded in July last year.

In FY24, the PBS reported a 0.9% increase in the production levels of large-scale manufacturing industries compared to corresponding period. For FY25, government has set an LSMI growth target of 3.5%.

Tobacco sector was the top contributor in the LSMI growth, which posted 90% production growth in July up from the level in the corresponding month last year.

In July 2024, 15 out of 22 sectors saw positive growth. The textile industry led the way with an 8.4% increase compared to the same month last year. The food sector grew by 4.8%, while coke and petroleum products rose by 5.6%. Chemicals saw a 9.6% rise, and beverages increased by 6.8%.

Other sectors with positive growth included paper and board (6.4%), leather products (1.1%), other manufacturing (football) (10.7%), wood products (8.6%), and computer, electronics, and optical products (1.1%).

On the other hand, some sectors faced declines. Pharmaceuticals dropped by 3.4%, iron by 12.7%, and electrical equipment by 19.4%. The furniture sector saw a significant decrease of 55.8%, while fabricated metal fell by 18.4% and rubber products by 16%.

Going forward, further interest rate cuts, continued support from the agriculture sector, increased overall demand, and a stable PKR exchange rate are all expected to boost LSMI production.