PHILIPPINE manufacturing output likely fell 2 percent in August, decelerating further from July’s 1.1-percent contraction in July, Moody’s Analytics said in an estimate ahead of the release of official data this week.
The economic research unit of Moody’s Investors Service expects the Volume of Production Index (VoPI) to post a reversal from the 13.3-percent expansion recorded in August last year.
“High base effects are at play, as domestic demand is doing well and global manufacturing demand is upbeat,” it said, noting double-digit growth in factory output a year ago.
“From June 2017 to May 2017 production averaged 9 percent year-on-year,” Moody’s Analytics added.
The weak peso has yet to provide a lift to exports and manufacturing but rather undesirably raised the import bill.
A rebound, however, could follow given the latest Purchasing Managers Index (PMI) figures.
“The near-term outlook is for continued expansion. The Nikkei manufacturing PMI rose to 50.8 in September following the 50.6 gain in August,” Moody’s Analytics said..
The National Economic and Development Authority also has an optimistic view about manufacturing growth for the rest of the year
Socioeconomic Planning Secretary Ernesto Pernia has said the agency expects manufacturing output to rise in anticipation of increased consumer demand during the holiday season.
“We need to expand our production capacity to take advantage of strong domestic demand and benefits from free trade agreements,” Pernia also said.
“In line with this, efforts must be given to accelerate the implementation of infrastructure projects and enhance the quality and cost-effectiveness of manufacturing-related services to ensure sustained growth.”
For the six years to 2022, the government has set a target of spending P8 to 9 trillion on infrastructure.
The Philippine Statistics Authority is scheduled to release official manufacturing output figures for August on Tuesday, October 10.