LSM growth declines 3.5% in September

Positive impact of change in calculation method fades away.

ISLAMABAD: Industrial production has shown a marked decline in September over the previous month as the impact of change in calculation methodology fades away quickly, show official statistics.

The growth in large industries slipped 3.5% in September over August this year, showed the data released by the office of Federal Bureau of Statistics (FBS) here on Tuesday.

The large industries had surprisingly reflected growth of almost 7% in August over the same month of the last year after the FBS suddenly changed the calculation methodology and increased the coverage of items from 100 to 112. The August numbers took the market by surprise- which had expected a negative outcome due to the prevailing energy crisis in the country.

The experts generally compare year-on-year data to see the trends but due to the change in methodology, the monthly number has become more relevant and representative of the ground realities than yearly and average data of the first quarter of the current fiscal year.

According to the FBS, in September the large industries grew 5.2% over last September. However, the analysts term this comparison irrelevant due to the change in base.

“The only clear trend is that the industrial production is alarmingly going down as evident from the monthly data”, said Senator Haroon Khan of PML- a leading industrialist of the country. He said deterioration in law and order situation in Karachi and load-shedding of gas and electricity caused massive drop in industrial production. He said this year’s comparison with last year was irrelevant.  While the monthly data reflects depressing trend ahead, the government seems upbeat about the yearly growth statistics.

According to the FBS, in September large industries registered 5.2% growth over corresponding month of last year. The data is computed on the basis of output of 112 industries monitored by Oil Companies Advisory Committee, Ministry of Industries and Provisional Bureaus of Statistics.

The FBS data showed that 65 items that were monitored by Provincial Bureaus of Statistics saw 2.7% growth in September – a major decline compared to the 5.2% shown by the FBS calculation.

The Oil Companies Advisory Committee data stated that the oil and gas sectors grew 0.5% in September over the corresponding month of last year. The Ministry of Industries and Production data depicted over 2% growth after the FBS added another industry in the list of 35 industries.

For the current financial year the government has estimated an overall growth of 4.2% in total national output. Out of that the share of the large scale manufacturing sector was estimated at 2%. A recent assessment by the International Monetary Fund has forecasted 3.5% growth for the current year.

July-September data

According to the FBS provisional statistics, during the first three months of the current fiscal year, large-scale industrial production grew 3.6%, thanks to rebasing done by the department.

The major push came from the growth in 65 industries whose statistics are compiled by provincial bureaus. This data showed 2.64% growth from July through September. The 36 industries monitored by the Federal Ministry of Industries showed 0.2% growth while oil sector grew 0.8% in the same period.

Published in The Express Tribune, November 30^th, 2011.