Pakistan’s Large Scale Manufacturing (LSM) sector recorded a strong recovery during FY2026, expanding by 5.8 percent during the July to May period compared with a contraction of 1.1 percent recorded during the same period of the previous fiscal year. The improvement reflects broader industrial recovery across multiple manufacturing segments, with most major industries contributing positively to overall production despite continued weakness in a few sectors.
According to the latest industrial performance data, 16 out of 22 manufacturing sectors registered positive growth during the review period. The strongest contributions came from the automobile industry, followed by food manufacturing, wearing apparel and coke and petroleum products. These industries played a significant role in driving industrial expansion as production activity improved across various segments of the manufacturing economy.
The automobile sector emerged as the largest contributor to industrial growth, adding 1.5 percentage points to the overall expansion in Large Scale Manufacturing. Food manufacturing contributed 1.4 percentage points, while wearing apparel accounted for 1.2 percentage points. Coke and petroleum products added a further 0.8 percentage points, reflecting stronger industrial activity and higher production across these major sectors.
While cumulative performance remained positive, monthly production figures presented a mixed picture. During May 2026, Large Scale Manufacturing recorded month-on-month growth of 1.2 percent, indicating continued recovery in industrial output. However, on a year-on-year basis, production for the month declined by 1.0 percent, primarily due to reduced output in pharmaceuticals, textiles and iron and steel manufacturing.
Despite these sector-specific declines, Pakistan’s automobile industry maintained strong momentum throughout FY2026. Production of trucks and buses increased by 64.6 percent compared with the previous year, making it one of the fastest-growing segments within the manufacturing sector. Passenger car production also recorded substantial growth, rising 42.0 percent during the fiscal year.
Production of jeeps and pick-up vehicles increased by 33.4 percent, reflecting continued demand across both commercial and consumer markets. Meanwhile, production of motorcycles and three-wheelers expanded by 30.4 percent, while tractor manufacturing recorded a 3.6 percent increase, supporting agricultural mechanisation alongside industrial growth.
The cement industry also reported improved performance during FY2026, driven primarily by stronger domestic demand. Total cement dispatches reached 50.5 million tonnes during the fiscal year, representing a 7.2 percent increase compared with 47.1 million tonnes dispatched during the previous year.
Domestic cement consumption remained the primary driver of growth. Local dispatches increased by 9.5 percent to 41.5 million tonnes, up from 37.9 million tonnes during the corresponding period last year. The increase reflects continued activity in construction and infrastructure development, supporting production across the cement manufacturing sector.
Export performance, however, moved in the opposite direction. Cement exports declined by 2.2 percent during FY2026, with total export dispatches reaching 9.0 million tonnes. While international shipments remained below the previous year’s level, stronger domestic demand more than compensated for the decline in exports, allowing the industry to maintain overall growth.
The latest manufacturing figures indicate that Pakistan’s industrial sector continues to recover after the slowdown experienced during the previous fiscal year. Growth across automobiles, food processing, apparel manufacturing and cement production demonstrates improving industrial activity, although continued weakness in pharmaceuticals, textiles and iron and steel highlights the uneven nature of the recovery. The performance of the Large Scale Manufacturing sector will remain an important indicator of broader economic activity as Pakistan moves further into the current fiscal year.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.