LSM: Million-dollar furniture leads growth

Pakistan exported a little over $5 million worth of furniture in the seven-month period from Jul 2021 to Jan 2022. January 2022 was the first time ever in the country’s history that monthly exports crossed a million dollars. Furniture makers exported no less than half a million units for $9 apiece. In the same period last year, furniture exports were a little less than 100 thousand pieces, but at double the rate at $19 apiece.

But why are furniture exports so important all of a sudden? You may say the 553 percent year-on-year growth in quantity exported is no small feat. Granted. Now look at the Large Scale Manufacturing data released by the PBS sitting pretty at where Jul-Jan LSM growth of 7.6 percent for Jul-Jan FY22. Where does the biggest contribution to LSM growth come from? You’d think some big-ticket item like automobile, or textile, or even the newly included wearing apparel. No. the most significant contributor is none other than the furniture industry.

Furniture manufacturing contributed more than two-fifth to the 7MFY22 LSM growth, with an overall weight of 0.5 percent in the index. That is what 555 percent change can do. Recall that the PBS uses export quantities as proxy for LSM purposes for the newly inducted categories that includes apparel, towels, football, and furniture. How much of “large-scale” effort goes in producing and exporting furniture units at $9 per piece is anybody’s guess. This is exactly why the use of export quantities for LSM was pointed out and criticized, as a million-dollar worth of monthly exports headlines the entire LSM growth.

Without it, the LSM growth would be much more modest. The modesty will start becoming visible next month, as export growth in furniture has slowed down in February. The growth on old base hovers around 4 percent and could possibly be a truer reflection. One-third of the 22 LSM broad categories posted negative growth for 7MFY22, but the big-ticket items such as food, textile, apparel, and beverages stood steady.

Granted that it remains an estimation exercise, and never aimed at capturing the entire output of the industrial activity. That said, the anomalies as big as the ones caused by insignificant items such as furniture industry, must be looked into.