Large Scale Manufacturing (LSM) index for March 2023 went down 25 percent year-on-year. This is the steepest monthly fall ever, excluding the last FY20 quarter – also known as the “Covid quarter”. On a cumulative basis, LSM growth is down 8.1 percent for 9MFY23 – easily the lowest level since peak Covid. The LSM graph since the beginning of FY23 almost looks a mirror image of the preceding nine months. LSM has now been in the negative zone for three straight quarters – also a first since FY20, where the last quarter was marred by nationwide lockdown.

Beverages, export quantity of readymade garments, and export quantity of footballs were the only three of the 22 LSM categories that showed positive year-on-year growth for March 2023. On cumulative level, the group wise growth is confined to four sectors – with leather and furniture also chipping in. Mind you, triple digit growth in furniture export quantity with a minuscule share of 0.5 percent in LSM index and no more than monthly export value of $1 million on average – had kept the LSM from falling lower, much earlier. That has now come down to earth, with furniture export growth moderating to under 30 percent.

Readymade garments with a considerably high weight in LSM index continue to be the leading contributor to growth – but that too has been coming down steadily every month. Garment exports for 10MFY23 have come down to 35 percent, to be reflected in the next LSM reading. May export numbers will be out soon, and it would not be a massive surprise if the downward trajectory continues.

Whether or not the readymade garment export should make the LSM is left for another day, but a look at textile category’s growth pattern suggests, things are going downhill pretty fast. Textile, with the largest weight is down 16 percent on a cumulative basis and 31 percent year-on-year for March 2023. The food sector – headlined by sugar and wheat is down 9 percent – as both commodities are 12 and 14 percent lower than last year, owing to a variety of reasons.

All else reads a sorry tale from automobiles (where car production is cut to half and motorbikes by a third) to cement and from electronics to pharmaceuticals. Electricity generation data also suggests much lower peak load demand as concessional tariffs for general and export-oriented industries has been rescinded, jacking up energy costs by 30-40 percent in a go. Pakistan is all set to register negative LSM growth for FY23 – and it could well be lower than the Covid year. The bottom may well be some way far, given how things are shaping up on export front, rising inflation, eroding purchasing power, and costlier credit.