The latest numbers for Large Scale Manufacturing (LSM) index are in; according to the Pakistan Bureau of Statistics (PBS) LSM’s nine-month growth stands at 5.89 percent, just shy of the recent FY14 high of 5.98 percent. If the current trends continue, the LSM might post a full year growth of 6.7 percent, a tad higher than the forecast 6.13 percent made by the National Accounts Committee last month.

While the PML-N can be expected to trot these growth numbers around, one should not lose sight of the anatomy of this growth. Yarn production, for instance, that has a nearly 13 percent weight in the LSM index has posted a growth of 0.06 percent in the nine-months ending March 2018. That’s the lowest number since FY13, and it comes despite the textile package.

Likewise, cloth production that has a weight of about 7 percent grew only 0.05 percent in this period, the lowest since FY12. If the sub-sectors that feed the biggest dollar earning sector, textile, isn’t growing healthy and then the mandarins should be concerned. Very concerned!

The story of other key export items – leather – is also poor. Upper leather production fell 23 percent year-on-year in 9MFY18 whereas footwear production was flat with a decrease of 1 percent. Sugar on the other hand has seen an output fall of nearly 12 percent, as against an average growth of 8 percent in the last five years.

That “March 2018 will also have a high base of 2 million tones (March 2017 production), which means 9M sugar production might also remain less than last year’s” was flagged in last month’s coverage of LSM.

However, thanks to a lower base, sugar production may post some growth in the fourth quarter, which could support the overall LSM index since the commodity has a decent 3.5 percent in the index.

The bulk of LSM growth stems from import-oriented items namely, steel, cement, automobile, and of petroleum products. Production of petroleum products grew at a five-year high of 12.31 percent, its highest since 9MFY13 thanks to higher refinery capacity, curb on smuggled fuel from Iran, and of course overall surge in demand on the back of consumerism, overall GDP growth amid lower oil prices. This trend is likely to continue in the foreseeable future.