Pakistan’s domestic demand recovery has continued into the opening month of FY27, with momentum strengthening across several major sectors, although the pace of recovery remains uneven, according to Khurram Schehzad. The latest indicators point toward improving activity in areas closely linked with consumer spending, mobility, construction and broader economic activity. The trend follows a recovery recorded across several important sectors during FY26 and suggests that improving demand conditions have carried into the new fiscal year.
In a post on X, Khurram Schehzad said demand recovered across several key sectors during FY26 and that the positive trend continued during the first month of FY27. Among the sectors highlighted, automobiles recorded the strongest performance, with demand increasing by 30% during FY26 before accelerating to 42% year on year in July. According to Schehzad, the pace of growth in automobile demand points toward an improvement in consumer confidence as well as financing conditions, both of which can influence consumers’ ability and willingness to make major purchases.
Petroleum demand also recorded a significant improvement during July after remaining broadly flat throughout FY26. Demand increased by 23% year on year and 20% month on month in July, indicating stronger activity in areas connected with mobility, transportation and economic activity. The increase in petroleum consumption provides another indication that movement and commercial activity have strengthened as the new fiscal year began. The monthly increase also points to a notable change from the relatively stable demand pattern observed during the previous fiscal year.
Cement demand continued to remain positive, although its growth rate was more moderate compared with automobiles and petroleum. Cement demand increased by 8% during FY26 and registered 6% year on year growth in July. The continued increase is consistent with improving construction and infrastructure activity. Cement consumption is closely associated with activity in construction and related sectors, making the continued positive trend an important indicator of demand conditions within the domestic economy.
The mobile phone segment also showed signs of stronger demand at the beginning of FY27. Mobile phone demand increased by 9% year on year in July, accompanied by a sharp rebound on a monthly basis. The improvement indicates stronger discretionary consumption as consumers showed greater demand for products beyond basic necessities. The performance of the mobile phone market also provides an indication of improving consumer activity as household spending conditions begin to recover across selected areas of the economy.
Fertilizer demand, however, remained an exception to the broader improvement seen across the other sectors. Demand declined by 4% year on year in July after recording strong growth of 17% during FY26. The decline indicates some sector-specific softness following a particularly strong performance during the previous fiscal year. While fertilizer demand weakened at the start of FY27, its performance differs from the stronger trends recorded in automobiles, petroleum, cement and mobile phones.
Schehzad also highlighted the distinction between demand indicators and industrial production measures. The automobile, petroleum, cement, mobile phone and fertilizer figures represent demand, sales or offtake indicators, while Large-Scale Manufacturing measures industrial production. According to Schehzad, the two sets of indicators are increasingly reinforcing each other as domestic demand recovers and productive activity responds to improving market conditions.
Large-Scale Manufacturing grew by around 5% during FY26, providing an indication that industrial production also strengthened during the previous fiscal year. At the same time, improving private-sector credit and business confidence are contributing to the recovery. Better access to credit can support business activity and investment, while stronger business confidence can encourage companies to increase production and respond to rising demand.
The combination of stronger demand indicators, improving industrial production, increased private-sector credit and better business confidence suggests that the recovery is becoming broader across the real economy. While growth remains uneven between sectors, the performance recorded during July indicates that improvements are no longer limited to a single area. The continued expansion in automobile, petroleum, cement and mobile phone demand provides multiple indicators of strengthening domestic economic activity.
The opening month of FY27 therefore presents a picture of an economy in which consumer and business activity is gradually becoming more visible across several major sectors. Automobile demand recorded the strongest acceleration, petroleum consumption increased sharply, cement remained on a positive trajectory and mobile phone demand improved, while fertilizer demand provided a contrasting trend. Together with approximately 5% growth in Large-Scale Manufacturing during FY26 and improving private-sector credit and business confidence, these developments indicate that Pakistan’s domestic demand recovery is gaining pace as FY27 begins.
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