Pakistan’s large-scale manufacturing sector recorded continued growth at the start of fiscal year 2026-27, with output increasing 3.03 percent year-on-year in July 2026, according to the September 2026 Monthly Economic Update and Outlook. The increase follows an 8.9 percent year-on-year rise recorded in July 2025 and indicates continued expansion in industrial activity. On a month-on-month basis, large-scale manufacturing output also increased by 9.5 percent from June 2026. The monthly movement reflects seasonal and calendar-related factors, while the annual increase provides an indication of continued improvement across several manufacturing segments.
A number of industries contributed to the increase in large-scale manufacturing during July. Automobile production recorded a substantial 57.0 percent increase, while wearing apparel output rose 22.0 percent and tobacco production increased 35.8 percent. Growth was also recorded in fabricated metal products, electrical equipment, other transport equipment, furniture and non-metallic mineral products. The broader increase across these industries indicates that the improvement was not limited to a single manufacturing segment and reflects stronger activity in several parts of the industrial sector.
The automobile sector also recorded growth during the first two months of FY2027. Vehicle production increased by 27.6 percent during July and August, while vehicle sales rose 29.9 percent over the same period. Production gains were recorded across cars, trucks and buses, as well as two-wheelers and three-wheelers. However, production of jeeps, pickups and tractors remained below the levels recorded during the corresponding period of the previous fiscal year. The mixed performance across vehicle categories suggests that overall automobile activity has improved, although the recovery has not been uniform across all types of vehicles.
The cement industry also showed signs of stronger domestic demand despite weaker export performance. Total cement dispatches increased by 2.8 percent to approximately 8.5 million tonnes during the period covered by the economic update. The increase was primarily supported by domestic sales, which rose 8.0 percent. This increase more than offset a 16.7 percent decline in cement exports, resulting in an overall rise in total dispatches. The stronger domestic movement provides an indication of continued demand from the construction sector despite challenges affecting external shipments.
Monthly cement figures, however, showed some moderation in August. Cement dispatches during the month were 0.7 percent lower year-on-year, with the economic update attributing the decline largely to seasonal monsoon effects on construction activity. Rainfall during the monsoon season can affect construction schedules and transportation, which can temporarily influence cement demand. Despite the slight annual decline in August, the cumulative increase in domestic cement sales during the period points towards underlying strength in local construction activity.
The performance of the cement sector is particularly relevant to the broader industrial outlook because construction demand supports activity across several related industries, including non-metallic mineral products, steel and fabricated materials, transport and other manufacturing segments. The 8.0 percent increase in domestic cement dispatches therefore provides an additional indicator of demand conditions within the domestic economy. At the same time, the decline in exports shows that the overall performance of the cement industry continues to depend heavily on domestic market conditions.
The manufacturing data also points to a broader improvement in industrial activity during the opening months of FY2027. Growth in automobile production, wearing apparel, tobacco, electrical equipment, fabricated metal products, furniture and other transport equipment indicates that multiple sectors contributed to the increase in large-scale manufacturing. Vehicle sales and production also recorded notable gains, while domestic cement dispatches increased despite a decline in exports.
According to the September 2026 Monthly Economic Update and Outlook, these developments support the outlook for large-scale manufacturing, with firm domestic demand providing an important source of support. While individual sectors continue to show different performance patterns, the increase in overall manufacturing output, vehicle activity and domestic cement sales suggests that industrial demand has remained active at the beginning of FY2027. Continued performance will depend on domestic consumption, construction activity, production conditions, input costs and developments in external markets during the rest of the fiscal year.
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