Large-scale manufacturing sector rebounds with 14.5pc growth in June

The large-scale manufacturing rebounded sharply with a 14.5-percent expansion in June, the final month of the fiscal year 2026, according to official statistics.

It provides a stronger-than-expected end to a volatile 2025-26 fiscal year marked by repeated contractions amid economic uncertainty.

The June spike in the Index of Industrial Production (IIP) of large-scale manufacturing suggests that the country’s industrial sector may be regaining momentum after a prolonged period of weakness.

Large-scale manufacturing accounts for more than 11 per cent of gross domestic product or GDP of the country, making its performance an important indicator of broader economic activity.

The rebound, however, was not broad-based.

Much of the June growth came from the clothing industry, which carries a dominant 61-percent weight in the manufacturing index.

The textile sector, the second-largest component with an 11 -percent weight, remained almost stagnant during the month.

The concentration of growth in garments raises questions about the strength of the wider industrial recovery.

While the performance of the clothing industry provided a substantial liftoff to the overall index, several other manufacturing segments continued to struggle, suggesting that the recovery remains uneven.

“The manufacturing sector had a difficult fiscal year,” says Dr. Zahid Hussain, an independent economist.

He goes on to say that industrial activity contracted in several months amid political uncertainty, the national elections and the fallout from geopolitical tensions, including the crisis in the Middle East centred on Iran.

Some industries are benefiting from stronger demand and export opportunities, while others continue to face subdued consumption, high production costs, financing constraints or weak investment.

The sharp rise in June, therefore, needs to be viewed in the context of the sector’s performance over the entire fiscal year rather than as evidence of a fully established recovery.

The sector recorded negative growth in October, November, December, February, March and May. January and another month recorded virtually flat performance.

As a result, the strong June expansion came after months in which manufacturers faced weak demand, uncertainty over investment and disruptions to business activity.

Against this backdrop, the June increase of 14.5 per cent is significant.

It marks a sharp turnaround from the contractionary trend seen during much of the fiscal year and could indicate that manufacturers are responding to improving business conditions and stronger external demand, particularly for export-oriented products.

Among the 23 major manufacturing groups, a number of industries recorded noteworthy performances during June. The goodies include food products, leather, chemicals, pharmaceuticals, rubber and plastics, basic metals, electrical equipment, machinery, motor vehicles, other transport equipment, furniture and other manufacturing.

The performance of these industries points to some degree of breadth in the June recovery, although the dominant contribution from garments means the overall picture remains heavily influenced by one sector.

Several industries, meanwhile, continued to perform poorly. Among the baddies named are beverages, tobacco, wood products, paper and paper products, fabricated metal products, computers and electronics, and printing.

Source: The Business Standard