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Business Recorder
5 days ago
- Business
- Business Recorder
LSM: Time machine the wrong way
The latest data from Pakistan's Large-Scale Manufacturing (LSM) sector paints a troubling picture: not of a comeback, but of an industry stuck in a prolonged state of regression. Yes, May 2025 marked a 2.3 percent year-on-year growth — the third positive monthly print this calendar year — but this is no sign of a turnaround. It's more of a dead cat bounce than a structural recovery. Cumulatively, LSM contraction has now entered its ninth straight month, with 10MFY25 output down 1.52 percent. The headline figure for March, previously celebrated as a return to growth at 1.78 percent, has been quietly revised down — and how. The revised March figure now shows a contraction of 2.78 percent, marking the lowest reading since the start of the current LSM base, barring the COVID-induced collapse of FY20. The culprit? A massive downward revision in the food index, led by sugar. March's sugar output was chopped significantly in the revised data, dragging the entire sector down. Seasonal production of sugar now clocks in at 5.78 million tons — nearly a million tons short of last year's haul. And with May historically contributing little to sugar output, the final season numbers are likely to be 8–9 percent below last year. Despite the recent uptick, the broader reality remains grim. The LSM index for April is barely above readings from the past two years, and still a full 10 percentage points below its FY18 level. In fact, output levels are now back to where they were in FY17 — wiping out nearly eight years of supposed industrial progress. On a cumulative basis, output is even lower than FY19 and only marginally ahead of FY21 — and that's saying something. To put it bluntly: Pakistan's industrial time machine isn't broken. It's just been set permanently in reverse. The diffusion index — a measure of how widespread growth is — offers some surface-level hope, with 12 of 22 tracked sectors in the green. But scratch the surface, and the optimism fades. Only a handful of these are growing with any real momentum. The rest are dragging their feet. Pharmaceuticals and textiles are barely growing at under 3 percent. Readymade garments have lost steam since earlier this year. The one relatively bright spot is automobiles, buoyed by a low base and some modest demand recovery. Meanwhile, the industrial backbone continues to deteriorate. Cement, steel, chemicals, and white goods — once the bellwethers of economic progress — are stuck in the red. Food has now officially joined that club, led by the sugar slump. 10 LSM subsectors are still operating below the index level that marked the beginning of this base year. Some may never climb back. That's not cyclical weakness. That's structural decay. To be fair, there are glimmers of hope. The State Bank's Purchasing Managers Index (PMI) for May reached a 12-month high. Capacity utilization across industries is holding steady at 65.7 percent — broadly in line with the last year's average. And while the central bank kept interest rates unchanged in its latest policy meeting, it did signal expectations of recovery led by services and industry in FY26. But the devil is in the details — or in this case, the omissions. The Monetary Policy Committee avoided naming any specific LSM sectors poised for growth. That's because, apart from autos, the cupboard is nearly bare. Growth in private sector credit, sentiment indicators, and import flows were cited instead. Translation: there's hope, but not a whole lot of substance behind it — at least not yet. Lower industrial electricity tariffs and cheaper credit might help slow the bleeding. But resurrecting industrial momentum is a different beast altogether. The highs of FY22 aren't just out of reach — they're not even on the industrial engine isn't revving up. It's idling in neutral — and sometimes slipping into reverse. And unless there's a concerted effort to address the structural issues holding LSM back, no amount of sugar-coating is going to change that.
Yahoo
09-06-2025
- Business
- Yahoo
Sharp slowdown in intermodal rail a warning for H2: AAR
In May, U.S. rail freight volumes offered a complex picture of both resilience and caution within the industry. Total U.S. rail carloads increased by 5.9% compared to the previous year, according to a monthly update from the Association of American Railroads, marking a slight decline from April's growth of 6.2%. This upward trajectory was propelled by gains across 13 out of 20 carload commodity categories, suggesting a broad-based improvement in demand within various industrial sectors. Weekly carload originations hovered around an average of 224,000, just shy of the figures recorded in March and April, reflecting a stable flow of carloads across the nation. However, the intermodal sector, which encompasses containers and trailers, presented a more subdued picture. With marginal growth of just 0.6% year over year, intermodal traffic marked its weakest percentage increase in the past 21 months. This sluggish performance can be attributed to declines in port activities and a cooling global trade atmosphere, resulting in noticeably lower import volumes. The closing weeks of May saw an intermodal decline of approximately 1.5% to 1.8% from the previous year, hinting at caution from shippers and retailers possibly resulting in decreased inventory and import levels as consumer goods demand these varying freight dynamics, the AAR Freight Rail Index shed 3.2% in May from April, the most significant drop in five months, underscoring broad-based softness particularly in the economically sensitive intermodal categories. This decline suggests significant challenges facing consumer goods and intermediate materials traffic. Situating these freight dynamics within the broader economic context reveals a mixed picture. The U.S. labor market remains relatively robust, with 139,000 new jobs added in May. However, all of this growth occurred in health care and hospitality, sectors less immediately tied to freight rail demand. The unemployment rate steadied at 4.2%, yet indicators show the labor market may merely be maintaining its current level without indicating expansive growth. Consumer spending — a bellwether for economic health — grew a meager 0.1% in April, with a notable decrease in goods spending, signaling that households are becoming more frugal in response to persisting uncertainties. Moreover, the manufacturing sector continued its sluggish trend with the ISM Manufacturing PMI (Purchasing Managers Index) registering at 48.5%, a level below the threshold indicating growth. Ongoing stagnation in manufacturing output reflects a sector that remains idle with little sign of imminent expansion. Compounding these concerns, the service sector, a previous economic highlight, showed signs of faltering with the PMI slipping below 50%, signaling ahead to the second half of 2025, the rail industry faces uncertainty. Although strong carload growth in the coal, chemicals and grain sectors provides optimism, challenges remain. The persistence of high inventory levels, coupled with decreased consumer demand, is a key headwind that carriers must navigate. Manufacturing output and the housing market's stagnation further cloud prospects, AAR said. Subscribe to FreightWaves' Rail e-newsletter and get the latest insights on rail freight right in your inbox. Find more articles by Stuart Chirls here. Greenbrier: Elevating rail safety standards with state-of-the-art training Predicting the unpredictable for intermodal Regional Rail expands shortline roster, acquires Minnesota CommercialHow freight rail fueled a new luxury overnight train startup The post Sharp slowdown in intermodal rail a warning for H2: AAR appeared first on FreightWaves. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
USA Today
03-06-2025
- Business
- USA Today
How Trump tariffs make American manufacturers grate, not greater
How Trump tariffs make American manufacturers grate, not greater One of the key promises behind President Donald Trump's tariff strategy was to revive U.S. manufacturing. But the policies intended to lay that foundation are currently having the opposite effect. During the past three months, as President Donald Trump and his administration have worked to finalize tariff rates across dozens of countries and product categories, U.S. manufacturing has contracted—according to the Institute for Supply Management's May report. '57% of the manufacturing sector's GDP contracted in May," Susan Spence, chair of the Institute for Supply Management's Manufacturing Business Survey Committee, said during a press briefing Monday. "That's up from 41% in April. The contraction is deepening.' Exclusive: Trump pushes countries for best offers as tariff deadline looms Manufacturing continued to contract in May The institute's Purchasing Managers Index fell to 48.5% in May, 0.2 percentage points lower than April's 48.7%. A number consistently below 50% means manufacturing is contracting. \"The headwinds from tariff increases are starting to show up in economic data," wrote Bill Adams, chief economist for Comerica. "The ISM Manufacturing PMI reports that tariffs are a drag on business, as is the uncertainty about where tariffs will settle over the longer term." As part of its monthly reports, the Institute for Supply Management includes anonymous quote from its survey panel on current business conditions. In the latest release, every comment touched on tariffs. One manufacturing manager expressed cautious optimism over the easing of tariffs in May—but remained concerned about the ongoing uncertainty. 'Tariff whiplash continues while the easing of tariff rates between the U.S. and China in May was welcome news, the question is what happens in 90 days. We are doing extensive work to make contingency plans, which is hugely distracting from strategic work." What manufacturing managers said about tariffs in May Below, managers from various industries reported how tariffs affected their organization in May, according to those quoted in the Institute for Supply Management's release: Trump administration asks for countries' best offers 'Production is frozen," Spence said Monday. "Growth can't resume until we get clarity on tariff policy.' Could some of the uncertainty surrounding tariffs be resolved soon? An exclusive report from Reuters on Monday said the Trump administration has set a deadline of June 4 for countries to give the United States their best and final tariff offers. The deadline would give the administration five weeks before its July 8 deadline, or 90-day pause, that they set on April 9. US economy is still growing While Monday's report wasn't upbeat for manufacturers, it did show that the broader economy is still growing. If the manufacturing index remains over 42.3%, it generally indicates that the economy is still expanding. "Goods-producing sectors of the economy will likely contract in 2025," Adams wrote. "However, service-providing industries, which account for most economic activity and employment, are likely to keep growing and help the economy avoid a recession."
Business Times
02-06-2025
- Business
- Business Times
Trade war hits Asia factories as exports, production slide
[HONG KONG] Manufacturing activity across several Asian nations weakened in May as US tariffs and trade uncertainty eroded demand. In Vietnam, new export orders contracted for a seventh straight month and input costs fell for the first time in about two years, according to S&P Global data published on Monday (Jun 2). In Taiwan, output and new export sales all fell for a second month, Indonesia saw the steepest drop in new orders since August 2021, and South Korean manufacturers recorded the deepest decline in output in nearly three years. Vietnam, Indonesia, Taiwan, Japan and South Korea all recorded a contraction in overall activity, with the Purchasing Managers Index remaining below the 50-no change mark. Activity in the Philippines, meanwhile, grew at a slower pace. The figures reflect the ongoing uncertainty amid US President Donald Trump's tariff campaign and the start-stop nature of US trade policies. Trump ratcheted up tensions late last week, vowing to double steel and aluminium tariffs and accusing China of violating an agreement to lower levies. Beijing retaliated on Monday by slamming Trump's claim and lodging accusations that the US had introduced new discriminatory restrictions. Bank of Korea governor Rhee Chang-yong said the outcome of trade negotiations between the US and China will have an impact for all of Asia's economies, highlighting their significance beyond the bilateral level. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'When we actually measure the impact of US tariffs on us, the indirect impact through China is very important because we are very much connected with them through supply chains,' the governor said on Monday. Trump's 'Liberation Day' tariffs remain in a grey zone as a US court rejected them, followed by a successful appeal from the administration. If they proceed, US levies would rise to a century-high next month. Manufacturers in Asia cited this whiplash as dampening demand now and in the future. 'Weaker demand conditions and increased client hesitancy to commit to new work amid US tariffs' hit sales in Taiwan, according to S&P Global, prompting a cut to employment and purchases. Businesses across the region cited lower demand rippling through the supply chain and on the factory floor. The May data follow a month when exports and freight activity surged across the region as US firms frontloaded shipments during Trump's 90-day tariff pause. South Korea's exports contracted in May as shipments to the US declined by 8.1 per cent, according to data released on Sunday by the customs office. Looking forward, there are some initial indicators that Trump's tariff pause to allow for negotiations and the tentative deals with the UK and China may help improve activity. In Vietnam, a major producer of clothing, shoes and smartphone parts, companies said an improvement in production and a more optimistic outlook was aided by tariff stability. BLOOMBERG
BusinessToday
23-05-2025
- Business
- BusinessToday
Ringgit Strengthens Amid Softer US Dollar And Mixed US Economic Data
The ringgit opened stronger against the US dollar on Friday, buoyed by a weaker US Dollar Index (DXY) and a mixed bag of US economic indicators, according to analysts. At 8 am, the local unit rose to 4.2575/2860 against the greenback, improving from Thursday's close of 4.2705/2765. It also made gains across the board against both major and regional currencies. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the DXY stayed below the 100-point mark, reflecting tempered market sentiment on the dollar. He noted that although the US initial jobless claims were slightly lower than expected at 227,000 (versus a consensus forecast of 230,000), the number of continuing claims rose to 1.90 million from 1.87 million. 'This suggests that the labour market is still resilient,' he told local media. Meanwhile, the US manufacturing sector posted positive momentum, with the Purchasing Managers Index (PMI) climbing to 52.3 points in May from 50.2 in April. 'A significant rise in new orders was the main driver,' he added. However, other components such as employment were muted, and businesses were increasing inventories in anticipation of higher tariffs and prices. Mohd Afzanizam also pointed to political developments in the US, highlighting the passage of the One Big Beautiful Bill Act by the House of Representatives. The bill extends the 2017 tax cuts, introduces new deductions for tips, and raises the cap on state and local taxes. 'Budget deficits are likely to balloon from the current 6.1% of gross domestic product (GDP). This will impact the government's debt burden, which already stands at 100% of GDP,' he said. He added that a weaker US dollar in this context bodes well for emerging market currencies, including the ringgit. At the same time, the ringgit recorded broad-based gains. It appreciated to 2.9591/9791 against the Japanese yen (from 2.9768/9812), 5.7131/7514 versus the British pound (from 5.7212/7292), and 4.8029/8350 against the euro (from 4.8218/8286). Regionally, it strengthened to 3.2943/3166 against the Singapore dollar (from 3.3061/3110), and to 12.9498/13.0484 against the Thai baht (from 13.0000/0254). The local note also rose to 260.7/262.6 against the Indonesian rupiah (from 261.5/262.0), and 7.65/7.71 vis-a-vis the Philippine peso (from 7.68/7.69). Related
