Large-scale manufacturing (LSM) index rose by 5.75 percent during July-January 2026 against the same period the year before while output rose by 10.54 percent in January compared to January 2025 and 12.08 percent when compared to December 2025. The single largest contributor to this growth was the automobiles sector with an estimated growth rate of 67.31 percent when compared to July-January 2024-25 and by 67.38 percent when compared to December 2025. The reason: higher sales on the back of increased demand (35.5 percent January 2026 overt December 2025 to 43 percent year-on-year) driven by lower interest and inflation.
The Pakistan Automotive Manufacturers Association (PAMA) has uploaded production and sales data till February 2026 — the two are synonymous with inventories not accounted for. Be that as it may, the numbers sold were 32,931 July-February 2025 against 42,214 in the same period this year — a rise of 69 percent for 1300cc or above, a negative 0.54 percent growth for 1000cc cars and a 28 percent growth rate for below 1000cc cars. Electric cars sales rose by 45.5 percent. Thus while there was a peak in January by February production/sales had begun to decline.
Automobile sales are not limited to the private sector and the federal government operates nearly 650,000 vehicles, reportedly the largest civilian fleet in the world, with provinces and local governments managing hundreds of thousands more including police, fire services, public works, and utilities. This does not distinguish between government sales and those secured by the private sector. However, it is relevant to note that the Punjab Government approved procurement of new vehicles for VIP use at a cost of 523.5 million rupees (20 Toyota Fortuners and 12 Toyota Hilux), Sindh approved 2 billion rupees for vehicle purchase for bureaucrats, including Assistant Commissioners, Khyber Pakhtunkhwa government approved the purchase of two vehicles for High Court judges and the Senate Chairman Yousaf Raza Gilani was provided a 9 crore rupee imported luxury car.
The second largest growth was in the petroleum sector, 11.71 percent, followed by the cement sector, 11.49 percent, and garments growth registered at 8.02 percent. Two observations are in order. First, petroleum sector growth reflects higher petroleum sales sourced to a significant reduction in the international price passed onto the consumers in January (a factor that is unlikely to be witnessed this month); the garment sector together with other major export sectors continues to lament high costs associated with high utility and policy rate compared to regional countries; while the local cement sector dispatches increased by 4.4 percent though exports rose by 61 percent year-on-year; however, with Afghanistan market suspended exports are likely to come down.
The credibility of LSM growth data is in question as this significant rise is not backed by a rise in employment opportunities. The government acknowledged a rise in unemployment to 7.1 percent in November 2025, for which data is available, while independent economists cite the figure of 22 percent based on the Housing Census.
And second, there are serious reservations voiced by the productive sectors of a prevailing economic environment that is not conducive to growth mainly because of the severely contractionary monetary and fiscal policies that are currently in place as a consequence of the International Monetary Fund’s harsh upfront conditions. Pakistan has yet to emerge from the haunting spectre of a default in the event that the Fund suspends its ongoing programme which the three friendly countries have indicated would lead to non-renewal of over USD 12 billion rollovers.
To conclude, one would hope that the government takes appropriate measures to render data more complete (inventories must be clearly identified) and credible.
