Pakistan’s large-scale manufacturing sector grew 8.3% in October 2025, driven by autos, petroleum, cement and consumer goods, despite weakness in pharma and other industries.
LSM Growth Rebounds Sharply in October
Pakistan’s industrial engine picked up pace in October 2025 as large-scale manufacturing (LSM) output rose by 8.3 percent compared with the same month last year. On a month-on-month basis, output also increased by 3.7 percent versus September, signaling that the recovery is not only broad-based but also gaining momentum.
The improvement comes after a difficult period marked by weak demand, high financing costs and energy bottlenecks. The October numbers suggest that some of these headwinds are easing, or at least being managed better by major industries, especially in sectors tied to consumer demand and construction.
Quantum Index of Manufacturing Shows Upward Trend
Provisional figures based on the 2015–16 base year show the Quantum Index of Manufacturing (QIM) rising to 118.43 in October. This index tracks changes in large-scale industrial output and is a key indicator for the health of the manufacturing sector.
Over the first four months of FY26, the QIM has averaged 115.16, which translates into cumulative growth of just over 5 percent, according to estimates from Topline Securities. While this is not a runaway boom, it does point toward a gradual and improving recovery in factory activity after the slowdown seen in previous years.
Autos, Petroleum and Cement Lead the Upswing
The rebound in LSM has been powered by a sharp revival in the automobile industry. Car and other vehicle production jumped by around 65 percent year-on-year in October and nearly 79 percent over July–October FY26. This surge reflects better availability of parts, improved financing conditions for buyers and slightly higher consumer confidence in the urban middle class.
Petroleum products have also played a major role, with output growing by close to 49 percent in October. Higher fuel demand from transport, power and industry has supported refinery operations and related downstream activities.
Cement production expanded by about 12.7 percent in October, and by more than 14 percent on a cumulative basis over the four-month period. This growth is linked to ongoing construction projects, housing demand and infrastructure activity. Together, automobiles, petroleum products and cement have been the backbone of the recent LSM recovery.
Consumer and Export-Oriented Sectors Add Momentum
Beyond the big industrial pillars, several consumer and export-related categories have also contributed to growth. Beverages and wearing apparel posted solid gains, reflecting steady demand for branded consumer products and higher value-added garments.
Food and related items have similarly supported the index, as producers respond to domestic consumption needs and export orders. Together, automobiles, petroleum products, cement, garments and food have accounted for most of the sector’s growth in the first four months of the fiscal year.
Sectors Still Under Pressure
Not all segments of large-scale manufacturing shared in the October recovery. Pharmaceutical manufacturing contracted by around 12 percent in the month, reflecting ongoing challenges such as pricing pressures, import costs for raw materials and regulatory issues. Leather products also remained in negative territory, pointing to weakness in both local demand and exports.
Chemicals, iron and steel, machinery and furniture continued to exert downward pressure on the overall index. These sectors are more directly exposed to global price trends, higher energy costs and investment decisions, which typically take longer to adjust than consumer-facing industries.
What the LSM Recovery Means for the Economy
A sustained rise in large-scale manufacturing is critical for Pakistan’s broader economic recovery. Higher industrial output supports jobs, boosts incomes and adds to government revenues through taxes. It also helps stabilize the external account when export-oriented industries such as garments and food processing perform well.
However, the uneven nature of the recovery shows that policymakers still need to address structural bottlenecks in energy, taxation and regulation, especially for pharmaceuticals, chemicals and engineering goods. If the positive momentum in key sectors continues and weaker areas are supported with targeted reforms, Pakistan’s manufacturing base could become more resilient and better positioned for long-term growth in FY26 and beyond.
