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The large-scale manufacturing (LSM) sector contracted by 0.78 per cent in October year on year due to a sharp slowdown in the garment industry, according to the latest Bangladesh Bureau of Statistics (BBS) data. LSM, which accounts for about 11 per cent of the gross domestic product (GDP), was dragged down by an 8.23 per cent year-on-year fall in apparel output.
The garment segment carries the largest weight on the LSM index - around 61 per cent.
This means movements in the segment have an outsized impact on the overall performance.
By contrast, textile, the second-largest component with an 11 per cent weight, grew by 6.43 per cent during the month.
Of the 23 large manufacturing subsectors tracked by the BBS, three posted contractions, while 20 recorded growth.
Apart from clothing, outputs declined in chemicals and pharmaceutical products as well.
On the other hand, transport-related manufacturing showed strong momentum in October.
The output of "other transport equipment" surged by more than 31 per cent, while that of motor vehicles and trailers rose by over 18 per cent.
Tobacco products recorded double-digit growth of 11.53 per cent, while most other sectors expanded at single-digit rates.
Economists attributed the overall contraction largely to the weakening demand for garments, particularly in Europe.
Several clothing factories were forced to suspend operations amid falling orders, they said.
Dr M Masrur Reaz, chairman and chief executive officer of Policy Exchange Bangladesh, told The Financial Express the demand for apparel products in Europe had started to fall in August.
"Orders have been declining for about four months, and the impact is now visible in export receipts," he said.
Merchandise export earnings in October fell by more than 7.0 per cent year on year to about $3.5 billion.
Dr Masrur also said roughly 7.0 per cent of the garment units had shut since August, unable to remain operational because of reduced orders and other pressures.
jasimharoon@yahoo.com