LSM rises 11% in March, monthly dip 5%
Large scale manufacturing (LSM) posted a mixed yet broadly positive performance in March 2026, reflecting an uneven recovery in Pakistan's industrial sector. The latest provisional data show that while annual growth remained strong, short?term indicators pointed to volatility and underlying structural challenges.
On a year-on-year (YoY) basis, LSM output increased by 11.09% in March 2026 compared with the same month last year. This notable rise suggests a recovery in industrial activity, supported partly by a low base effect and improved performance in selected sectors. However, on a month-on-month (MoM) basis, output declined by 5.19% compared with February 2026, highlighting short?term fluctuations and inconsistent production trends. For the cumulative period of July?March FY2025-26, the LSM sector recorded growth of 6.48%, indicating moderate expansion over the nine?month period. The quantum index of manufacturing (QIM) stood at 123.03, reflecting a gradual improvement in overall industrial output compared with the previous year.
A closer look at sector?wise performance reveals highly non?uniform growth. The automobile sector emerged as a key growth driver, registering a sharp increase of over 61% YoY in March 2026. This surge reflects improved consumer demand, easing supply constraints and a relatively stable production environment for the industry. Similarly, sugar, which carries a weight of 3.43 in the LSM basket, recorded a strong increase of 30.97% in July?March 2025-26, highlighting its significant contribution to overall manufacturing growth. Garments and petroleum products also posted solid gains, contributing positively to overall growth.
The textile sector showed mixed results. While cotton cloth production recorded slight growth, cotton yarn declined marginally by 1.34%, indicating inconsistent demand across the textile value chain. Despite these variations, value?added textile segments such as garments continued to support overall output.
On the downside, several key industries remained under pressure. The cement sector contracted by 6.64% YoY, reflecting subdued construction activity and lower demand. Likewise, iron and steel production declined significantly by 11.46%, indicating ongoing challenges in large?scale infrastructure and industrial projects. The fertiliser sector also recorded a decline of 7.55%, likely due to seasonal factors and demand fluctuations.
In terms of contribution to overall growth, major positive inputs came from food, tobacco, textiles (particularly garments), petroleum products, chemicals, automobiles and electrical equipment. The automobile sector stood out as a major contributor, while petroleum and chemical products also played a supportive role. Conversely, sectors such as iron and steel, machinery and fertilisers weighed on overall performance. Overall, the March 2026 LSM data suggest that Pakistan's manufacturing sector is on a gradual recovery path but remains fragile, with mixed momentum. Growth is concentrated in a few high?performing sectors, while traditional heavy industries continue to face headwinds.
Sustaining industrial growth will depend on improving macroeconomic stability, ensuring reliable energy supply, managing input costs and strengthening domestic demand. Without these supportive conditions, the recovery in LSM is likely to remain brittle and vulnerable to shocks.
Sugar output rebounds
Sugar has displayed a strong presence in July?March 2025-26, highlighting its significant contribution to overall manufacturing growth. Its output rebounded sharply, strengthening its role in food supply and inflation dynamics within the broader agricultural and industrial landscape. The output has grown significantly in the first nine months of FY2026, reflecting improved crop yields, favourable weather conditions and better supply chain dynamics. Sugar production rose by an impressive 31% (YoY), reaching 7.56 million tonnes. This sharp increase marks a notable recovery from the previous fiscal year, when production had dropped to 5.82MT in FY2025, compared with 6.80MT in FY2024.