Pakistan’s large-scale manufacturing grows 2.3% in May

Pakistan’s large-scale manufacturing (LSM) sector posted a year-on-year growth of 2.3% in May 2025, marking the second consecutive month of expansion after five months of contraction, according to the latest data from the Pakistan Bureau of Statistics.

On a month-on-month basis, LSM output also improved, offering early signs of a recovery in industrial activity. Key sectors driving growth included food, fertilizer and autos.

Sector-wise highlights:

• The food sector grew 4.4% year-over-year, led by a 44% jump in sugar, bakery and confectionery products.
• The fertilizer sector rose 20%, mainly due to a low base from a plant shutdown in May 2024.
• Automobile manufacturing surged 44% during the first 11 months of FY25, supported by easing import restrictions and a low base.
• The textile and tobacco sectors posted gains of 3% and 9%, respectively.

However, food processing declined 2.3% in the 11-month period, largely due to weak sugar output earlier in the fiscal year.

Analysts: Recovery positive but still uneven

Analysts say the recent uptick is encouraging but caution that broader industrial recovery remains fragile.

“Two consecutive months of growth suggest that LSM may have turned a corner,” said one industry observer. “But the improvement is patchy and heavily reliant on a few sectors benefiting from low-base effects.”

He noted that while autos and fertilizers have rebounded, many other industries are still facing high input costs and soft consumer demand.

Outlook: Easing inflation and rate cuts provide tailwinds

Analysts believe recent interest rate cuts, combined with a steady decline in inflation, are beginning to support the manufacturing sector. Lower energy and input costs, along with improved demand, are creating a more favorable environment for growth.

“If manufacturers can respond quickly to improving conditions, we could see a more sustained recovery in the coming quarters,” said an analyst.

Still, much will depend on global demand, policy stability and how quickly domestic consumption rebounds.