Pakistan Bureau of Statistics released Quantum Index Number (QIM) of Large Scale Manufacturing Index (LSMI) for Jan’21. As per PBS data, Jan’ 21 LSMI advanced by 9.13%YoY to 175.15 in all three sources, MOI, OCAC, and BOS Indices. While LSM during 7MFY21 posted the growth of 7.85%YoY MOI expanded on recovery in production of Auto, Sugar, Fertilizer, Cement, Billets/Ingots and Cigarettes sectors.
Ministry of Industries Index (MOI) witnessed an increase of 9.76% in 7MFY21 as automobile production recorded a substantial recovery due to strong local demand on lower interest rates. Wherein, Cement and Steel production also posted a positive recovery, owing to resuming economic activities and government focus on the construction sector. Expanded production of Wheat & grain milling, Pharma, Chemicals, Refrigerators, Air conditioners and Electric transformers advanced Bureau of Statistics Index (BoS) by 3.98%YoY to 181 in 7MFY21. However, 2.26%MoM decline was observed in Jan’21 as compared to Dec’20. OCAC Index progressed by 4.63%YoY in 7MFY21, production of Petroleum Products, Motor spirit, High-Speed Diesel, Furnace oil and LPG were the major contributors.
Outlook
The recovery in aggregate demand with lower interest rates and revival of disposable income on resuming of business endured LSM growth. On the other side, elevated exports and a favorable business environment along with the availability of electricity and other raw materials to improve the supply side. We foresee Cement, Steel, and Automobile sectors continue to report strong growth on the back of low-interest rates and government incentives to the construction sector and the start of huge government projects. Furthermore, overall production autonomy in the Textile and Fertilizer sectors would also improve the overall production. We expect recommencement of infrastructure projects, development of road networks and construction of the dams, and the start of housing schemes to keep the construction-related material on the higher side.
Source: PBS & Spectrum Research