Large-scale manufacturing output falls by 2.3 per cent

Floods impede industrial sector growth.

KARACHI: Production by the large-scale manufacturing (LSM) sector declined by 2.3 per cent during July to November of the current fiscal year (FY11), compared with a growth of 0.5 per cent in the corresponding period of the previous year.

The first five months of the fiscal year had been dismal for the manufacturing sector, as growth continuously remained negative for four months, according to the quarterly review of the State Bank of Pakistan (SBP) released on Wednesday.

The decline in production was due to heavy rainfall and floods in the country in July and August 2010 leading to disruption in the supply of raw material from the construction, petroleum refining, cotton textile and agro-based industries. The damage to road networks and power infrastructure also impeded overall industrial performance.

The construction industry showed dismal performance with a negative growth rate, while prices of building material increased by 12 per cent during the period. However, strong domestic demand and high prices of agricultural produce led to strong growth in the automobile, fertiliser and engineering industries.

The external sector had a mixed effect on the local industry as export demand for cement, pharmaceuticals and electrical goods dropped due to Pakistani manufacturers losing ground in export markets captured over the past two years.

However, a gradual recovery in the US and Europe provided a boost to the leather and textile sectors. The sharp increase in international cotton prices also helped the textile industry as higher export prices in FY11 improved profit margins.

Published in The Express Tribune, February 3^rd, 2011.