Manufacturing output recovers in January

By Chino S. Leyco

The country’s manufacturing output recovered in January after a series of declines in the final months of last year, the National Economic and Development Authority (NEDA) said.

In the Monthly Integrated Survey of Selected Industries (MISSI) of the Philippine Statistics Authority, the Volume of Production Index (VoPI) for manufacturing grew by 21.9 percent in January this year.

The latest figure was higher than the 14.9 percent in the previous year and a reversal from the 9.2 percent decline last month.

The Value of Production Index (VaPI), likewise increased by 20.4 percent, bringing the three-month moving average growth rate of both indexes back to positive territory at 1.1 and 0.4 percent, respectively.

In a statement, Socioeconomic Planning Secretary Ernesto M. Pernia said that manufacturing output is expected to sustain growth this year on the back of robust consumer demand, higher government consumption, and continued gains in investments.

The sustained momentum in global trade growth will also provide additional boost to manufacturing growth, particularly export-oriented sectors,” Pernia said.

He further explained that the growth of manufacturing was due to expansions in petroleum products, construction-related products, some export-oriented products, and food manufacturing.

These offset the declines in wood products, tobacco, transport equipment, and rubber and plastic products, the NEDA chief said.

Pernia also noted that the industry firms’ outlook in the first quarter remained optimistic as improvement in production capacity, new product lines, and enhanced marketing strategies are anticipated to increase both production and sales.

Higher consumer demand, particularly on manufactured goods, is also expected to continue with the increase in households’ disposable income due to the Tax Reform for Acceleration and Inclusion (TRAIN) law.

However, he noted that firms remain cautious on some risks to growth such as the exchange rate, higher global commodity prices and weather-related disturbances.

“The perceived negative effects, however, will be offset by improved infrastructure that is partly being financed by TRAIN.  Moreover, the succeeding packages of the TRAIN are intended to make our tax regime internationally competitive,” Pernia said.

“To support the upward growth trajectory of manufacturing, the government must create and maintain an environment that is conducive to innovation and entrepreneurship, and enhance the production capacity of local suppliers of raw materials and intermediate goods, especially micro, small and medium enterprises,” he added.

The NEDA chief said that improving connectivity among production site, processing areas and markets, and continuing to pursue bureaucratic and regulatory reforms to reduce the cost of doing business across all levels of government must also be pursued.

MISSI is a report that monitors the production, net sales, inventories and capacity utilization of selected manufacturing establishments to provide flash indicators on the performance of the manufacturing sector.