“Key large-scale manufacturing sectors – such as textile, food, automobiles, POL and tobacco – were already depicting strong growth till Q1-FY25,” said the State Bank of Pakistan’s monetary policy statement when waxing lyrical about the industrial activity gaining traction.

Just moments after the MPS announcement, the Pakistan Bureau of Statistics (PBS) published the Large-Scale Manufacturing (LSM) numbers for 4MFY25 – which showed a 0.64 percent year-on-year contraction. Textile, food, and POL with a combined share of 36 percent in the unadjusted LSM and 87 percent of the five sectors mentioned in the MPS – have grown at 2.6, 2.2, and 1.3 percent year-on-year respectively. If this is how the observers are going to treat “strong” growth despite the low base, we may soon be seeing the MPS throwing “exemplary” pretty soon.

This marks the third straight month of negative cumulative LSM growth – after a brief period of recovery in the preceding four months. Mind you, the contraction is on top of a very low base from the last two years. For context, the comparable four-month period in 2018 had a similar LSM index reading to today’s, separated by a decimal. October’s year-on-year growth is also up by only a whisker – at the second decimal, with the previous low recorded in 2017.

In terms of sectoral contribution, the diffusion index is back at 50, with 11 of the 22 LSM sectors tracked by the PBS for index computation returning negative year-on-year growth during October 2024, a slight improvement from 12 in the negative territory in the same period last year. Consider this. Half of the 22 sectors even today report a lower index value than eight years ago when the LSM rebasing was done. Of the ones in the positive zone, half are within single-digit percentage growth from FY16.

Readymade garment export remains the largest contributor in terms of impact accounting for two-thirds of positive growth during 4MFY25. The export quantities for October 2024 have been revised downwards to 12 percent from provisional estimates of 20 percent and should be reflected in the advance release trade data due soon.

The next big contribution comes from automobiles, as cars and motorcycle sales have risen from the ashes. Latest data shows the momentum has picked up pace and with the interest rates down by another 200 basis points; there is no reason to believe it will slow down anytime soon. All said, this is coming off a very low base, as car sales of late even after rebounding are barely at 50 percent of the 100-month moving average.

Textile sector growth has been rather slow, as both cotton yarn and cotton cloth production have remained largely static. How far back have the settings been reset in the spinning and weaving sectors is evident from the fact that yarn and cloth production is 21 and 13 percent shy of the 100-month moving average.

The construction-related industries have shown no signs of resurgence despite the low base. Steel, cement, wood, paint, and glass have all struggled as production values are a far cry from even a decade ago. While the favorable interest rate movement may bring some interest back, the public sector spending on infrastructure will stay curtailed as the government tries to balance budgets – and that is likely to keep the growth in check.