Pakistan’s Industrial Productivity decline by 3.8%

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Economy

Pakistan’s Industrial Productivity decline by 3.8%

  • Six monthly fall in Large Scale Manufacturing
  • Auto, Petroleum sector witness massive decline

Large Scale manufacturing declined by 3.78% in May 2019, which takes 11MFY19 decline to 3.5% YoY owing to a slowdown in demand and cost hikes due to depreciating currency and monetary tightening.

The decline in monthly LSM figure stands at a massive figure of 7.97% if compared to April-2019. OCAC, MOI, declined by 14.07/3.2% YoY while BOS declined by 2.4% in May-2019.

Massive Decline in Petroleum, Food and Auto Sectors

The LSM index was primarily dragged due to the massive decline in Oil and Petroleum, Food and Auto Sectors. Auto Sector production declined by 29.56% in May-19 as compared to May-18.

Food and Beverages segment also took a hit as inflation reaps in taking off demand. Total production of Food, Beverages and Tobacco segment declined by 9.1%YoY in May-19.

Similarly, economic slow down take a toll on Oil and Petroleum products as their production declined by 14%YoY in May-19.

Iron & Steel segment along with Paper Products Industry witnessed an average 8%YoY decline in production during the month of May-19.

Fertilizer and Electronics Shine

Fertilizer sector witnessed a massive increase of 27% YoY in May 2019 due to increased demand in nitrogen and phosphorus fertilizers.

This improvement is the outcome of LNG based fertilizer players increasing their production given availability of subsidized fuel. Fertilizer Sector witnesses better DAP off takes amid good performance of Sugar Cane and Wheat Crops which had uplifted the Volumes.

Moreover, the Summer Season bring increased sales for the Consumer Durable segment which increased its production to cater to the increased demand. Electronics segment witnessed Production increase of 21%YoY in May-2019.

Outlook

Downward trend in Large Scale Manufacturing is likely to continue due to economic challenges which will lead to demand reduction. Cyclical sectors are expected to be bear major impact.

It must be noted that sequential recovery in the Petroleum Products segment is expected as higher utilization of refineries is expected during the summer season.

Also Read: Government borrows more from State Bank

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