The production of Pakistan’s major manufacturing industries, which included readymade garments, fertilizer, iron, and steel, unexpectedly increased in August compared to July, breaking a four-month downward trend.
When compared to the same month last year, however, the production of goods by significant industries only slightly increased in August, by 0.6%. It happened at a time when many industrial facilities were shut down and others had scaled back their operations as a result of the government’s efforts to calm the overheated economy.
The Pakistan Bureau of Statistics (PBS) revealed on Wednesday that the LSMI (Large-Scale Manufacturing Index) climbed by 3.9% when compared to July 2022 and by 0.6% when compared to August 2021.
However, the LSM output decreased by 0.4% from year to year in the first two months (July to August) of the current fiscal year.
For August 2022, the Quantum Index of Manufacturing (QIM) was calculated to be 114.8. It was 112.6 from July to August 2022, according to the PBS.
Production of clothing increased by 5.3% in the JulyAugust 2022 period, while output of iron and steel increased by 0.5%. On the other hand, production of petroleum products fell by 1.2%, that of cement by 2%, and that of fertilizers by 0.2%.
Large-scale manufacturing (LSM) output increased by 0.6% year over year in August, experts said, which was in line with expectations.
The market had expected the LSM sector to either break even, contract a little, or increase a little in August. Tahir Abbas, head of research at Arif Habib Limited stated that?the 0.6% gain was not significant.
The low base impact led to the nominal growth.
Due to the overall economic slowdown over the course of four months (Sept-Dec), he stated, “LSM output is projected to stay low.” After December 2022, “the sector is predicted to have a major turnaround.”
In in order to avoid a sharp decrease in the State Bank’s foreign exchange reserves, administrative measures have allowed the government to limit the import bill.
Due to significant import payments and repayment of foreign debt, the reserves have decreased by about $9 billion during the last 10 months. They currently fall below $8 billion, which only covers imports for around six weeks.