Abdul Ghani

Pakistan’s large-scale manufacturing (LSM) sector recorded a strong recovery during the early months of fiscal year 2025–26, reflecting improving industrial activity and rising domestic demand, according to the Monthly Economic Update and Outlook for December 2025 released by the Finance Division.

The report stated that LSM registered a growth of 5.02 percent during July–October FY2026, marking a significant turnaround from the contraction observed in the same period last year. The improvement was driven by higher production across several key industries, supported by better energy availability, easing input constraints and improved business confidence.

Among the major contributors, the automobile sector showed particularly strong performance. Production of cars increased by 65.1 percent, while output of trucks and buses rose sharply by 97.0 percent during the review period. Production of jeeps and pickups also expanded by 38.8 percent, reflecting rising consumer demand and improved supply chains. The rebound in the automotive sector was supported by easing import restrictions, better availability of parts and components, and gradual improvement in consumer financing conditions.

The cement industry also recorded notable growth, with cumulative dispatches reaching 21.4 million tonnes during July–November FY2026, representing an increase of 11.5 percent compared to the same period last year. Domestic cement dispatches grew by 14.7 percent, indicating recovery in construction activity, while exports remained relatively stable at 4.01 million tonnes. The report attributed this performance to improved public and private sector construction activity and better demand from infrastructure-related projects.

Other manufacturing segments contributing to overall growth included textiles, food processing, petroleum products, and non-metallic mineral products. The report highlighted that improved energy supply, particularly for industrial users, played a key role in supporting production across these sectors. Additionally, improved availability of raw materials and easing supply chain constraints helped sustain manufacturing output.

The Finance Division noted that the improved performance of large-scale manufacturing reflects broader economic stabilization and the positive impact of policy measures aimed at reviving industrial activity. It also highlighted that continued support for industrial production, including consistent energy supply and a predictable policy environment, remains essential for sustaining momentum.

Looking ahead, the report indicated that LSM growth is expected to remain positive in the coming months, supported by stable macroeconomic conditions, easing inflationary pressures and growing domestic demand. However, it cautioned that global economic uncertainties and fluctuations in commodity prices could pose challenges to sustained industrial expansion.

The government reaffirmed its commitment to strengthening the industrial base through structural reforms, investment facilitation and improved infrastructure, with the aim of ensuring long-term, inclusive growth in the manufacturing sector.

Credit: INP-WealthPk