July LSM Surge Welcomed, but Uneven Recovery Calls for Sector-Specific Policies

Pakistan Businessmen and Intellectuals Forum (PBIF) President and All Karachi Industrial Alliance Chairman Mian Zahid Hussain has welcomed the July improvement in large-scale manufacturing (LSM). However, he warned that the recovery remains uneven and requires targeted policy measures for weaker sectors.

According to the latest Pakistan Bureau of Statistics data, the Quantum Index of Manufacturing (QIM) reached 119.13 in July 2026. The index stood at 115.62 in July 2025 and 108.78 in June 2026.

The latest figures show a 3.03 percent year-on-year increase and a 9.51 percent month-on-month rise. The improvement follows a 3.48 percent year-on-year contraction in LSM during June 2026.

Overall LSM growth reached 4.98 percent during FY2025-26. Mian Zahid said the July increase offers an encouraging signal for industrial activity.

Automobiles and Garments Lead July Growth

Several major manufacturing groups posted strong growth during July. Automobile production increased by 57.01 percent, while transport equipment rose 40.22 percent.

Tobacco production grew 35.82 percent and garments increased 22.03 percent. Fabricated metals rose 13.55 percent, followed by furniture at 10.10 percent and electrical equipment at 7.88 percent.

Non-metallic mineral products recorded 4.25 percent growth. Petroleum products also increased by 1.34 percent.

Garments made the largest contribution among these sectors, adding 3.87 percentage points to overall LSM growth.

Textiles, Pharmaceuticals and Steel Remain Under Pressure

Despite the broader improvement, several important industries recorded significant declines. Textile production fell 3.09 percent, while pharmaceuticals dropped 20.79 percent.

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Iron and steel products declined 11.40 percent. Food production fell 6.39 percent, beverages dropped 8.77 percent and chemicals decreased 6.19 percent.

Paper and board production declined 4.26 percent. Machinery and equipment also fell sharply by 13.33 percent.

Pharmaceuticals alone reduced overall LSM growth by 1.24 percentage points. Textiles, chemicals and steel together cut the index by around 1.5 percentage points.

Mian Zahid stressed that the textile sector needs immediate attention. Textiles carry the largest 18.16 percent weight in the LSM index and remain central to Pakistan’s export economy.

Garment production increased strongly, while cotton yarn output rose 2.73 percent. However, industry stakeholders have raised concerns about possible misuse of the Export Facilitation Scheme and its impact on domestic cotton fabric production.

These trends show a clear divergence within the textile value chain.

Micro-Level Data Show Wider Industrial Weakness

Detailed production figures also indicate pressure on domestic manufacturers and consumer-related industries.

Cooking oil production declined by around 19.22 percent year-on-year in July. Vegetable ghee production also fell 11.81 percent.

The pharmaceutical sector faced even sharper declines. Production of liquids and syrups dropped 25.25 percent, while injections fell 45.45 percent. Capsule production plunged 61.91 percent.

Steel billets and ingots also recorded a 32 percent decline. These figures suggest that July’s overall industrial increase remained concentrated in a limited number of sectors.

Mian Zahid Calls for Targeted Industrial Policies

Mian Zahid urged the government to avoid a one-size-fits-all industrial policy. Instead, he called for a targeted strategy based on the specific needs of each sector.

Textile exporters need reliable electricity and gas at competitive rates, adequate raw materials, faster refunds and easier access to working capital, he said.

The pharmaceutical industry requires uninterrupted supplies of active pharmaceutical ingredients (APIs) and other imported inputs. Meanwhile, the steel sector needs measures to address energy costs, financing constraints and raw-material shortages.

He noted that the 9.51 percent month-on-month increase in July represents a positive signal. However, one month of growth does not establish a sustainable industrial recovery.

The government should use sector-specific data to identify bottlenecks and introduce targeted corrective measures, Mian Zahid said. Sustainable industrial growth will require broader recovery across major export-oriented and employment-generating industries.