By Farooq Awan

Pakistan's large-scale manufacturing (LSM) sector grew 5%, reversing a 0.74% contraction in the previous year, as 16 of 22 industrial sectors recorded growth and domestic cement sales increased sharply.

According to the Ministry of Planning, Development and Special Initiatives' Monthly Development Update – August 2026, available with Wealth Pakistan, the improvement indicates a broad-based recovery in industrial activity, with automobiles, transport equipment and furniture among the strongest-performing sectors.

The automobile sector recorded the highest growth at 57.8%, followed by other transport equipment at 42.4% and furniture at 22.7%.

Other industries contributing to the expansion included wearing apparel, which grew 7.6%, while textile production increased 2.3%. Food manufacturing, another major component of the industrial sector, expanded 1.7%.

Overall, 16 out of the 22 LSM sectors posted positive growth, showing that the industrial recovery extended beyond a handful of industries.

The improvement is significant after the 0.74% contraction recorded previously, indicating a turnaround in manufacturing activity as economic conditions stabilise and domestic demand improves.

Construction-related activity also showed signs of strengthening, with cement demand providing an important indicator of improving domestic activity.

Total cement dispatches increased 6% year on year to 4.5 million tonnes. More significantly, domestic cement sales surged 17.3%, indicating stronger demand within the country.

The rise in domestic dispatches is particularly notable because cement consumption is closely linked with construction and infrastructure activity. The increase therefore provides an additional indication of improving activity beyond factory production.

The Planning Ministry's economic assessment points to continued improvement in industrial conditions as the economy moves into FY2026-27.

The broader macroeconomic environment has also become more supportive of economic activity, with inflation remaining contained and monetary conditions easing. The report says inflation stood at 9.2% in July 2026, while the State Bank of Pakistan maintained the policy rate at 10.5%.

The document says Pakistan entered FY2026-27 with renewed confidence, supported by macroeconomic stabilisation and improving growth prospects. The government's development strategy for the year places emphasis on private sector-led growth, exports, digital transformation and effective implementation of the development programme.

The expansion across 16 manufacturing sectors, together with the sharp increase in domestic cement sales, indicates that the industrial recovery is becoming more broad-based, providing a stronger base for manufacturing activity in FY2026-27.

Credit: INP-WealthPk