Pakistan’s Large-Scale Manufacturing (LSM) sector continues to experience an uneven recovery as it enters the final stretch of FY2025. According to recent official data, the LSM index posted a month-on-month (MoM) increase of 2.1 percent in January 2025, showing a modest rebound from the previous month. However, this short-term improvement contrasts with a broader year-on-year (YoY) contraction of 1.2 percent, highlighting the persistent challenges faced by the industrial sector.
Comparatively, January 2024 saw a slight YoY growth of 1.1 percent, making the recent downturn more pronounced. For the cumulative period of July to January FY2025, LSM output declined by 1.8 percent — a steeper drop than the 0.6 percent contraction recorded during the same period of the previous fiscal year. These figures suggest that while some sectors are stabilizing or even recovering, the overall momentum in the industrial space remains fragile.
The sectoral breakdown paints a more nuanced picture. Out of 22 monitored manufacturing segments, 11 posted positive growth during the reported period. Noteworthy performers include textiles, which grew by 2.1 percent, and wearing apparel, which showed a strong 10.4 percent rise. The petroleum and coke category also edged up by 2.5 percent, while pharmaceuticals recorded a modest increase of 2.0 percent. Meanwhile, beverages saw marginal growth of 0.2 percent.
More significant gains were recorded in the automotive and tobacco industries. Automobiles surged by 45.7 percent, reflecting renewed consumer demand and improved supply chain conditions. Tobacco manufacturing, a smaller but volatile sector, rose sharply by 20.2 percent.
A standout performer in this recovery narrative has been the automobile sector. Between July and February FY2025, vehicle production figures showed remarkable upward trends. Car production increased by 41.9 percent, while trucks and buses surged by an impressive 105.0 percent. Jeep and pick-up manufacturing followed closely, growing by 78.2 percent. However, this positive streak was not universal; tractor production, a key indicator of agricultural support infrastructure, declined sharply by 30.0 percent, reflecting potential stress in rural demand or supply-side constraints.
The cement sector also showed strong performance in February 2025. Cement dispatches reached 3.6 million tonnes — up 10.1 percent from the same month last year. Local cement dispatches grew by 6.8 percent to 3.1 million tonnes, while exports rose by a striking 34.3 percent, with outbound shipments totaling 531,736 tonnes. This growth is particularly significant as it reflects increased activity in both domestic construction and foreign demand, perhaps driven by infrastructure projects and recovery in key export markets.
Despite these positive signals in select segments, the LSM sector’s broader trajectory remains cautious. Ongoing macroeconomic pressures — including inflation, energy costs, and global commodity fluctuations — continue to weigh on manufacturing capacity and investor sentiment. Structural issues, such as limited access to capital, high input costs, and regulatory bottlenecks, also contribute to this tepid industrial performance.
In summary, Pakistan’s LSM sector is displaying pockets of resilience, but its overall recovery remains inconsistent. Continued government support, policy reforms, and targeted incentives will be essential to drive a more synchronized and sustainable industrial revival as the country looks to strengthen its economic foundations heading into the next fiscal year.