FACTORY output — both in volume and value terms — rebounded January, the Philippine Statistics Authority (PSA) reported on Tuesday, raising expectations of sustained growth for the rest of the year.
The volume of production index (VoPI) rose 21.9 percent in January from a year ago while the value of production index (VaPI) climbed 20.4 percent, according to the PSA’s Monthly Integrated Survey of Selected Industries.
A month earlier, VoPI declined by 9.2 percent and VaPI was also down by 9.8 percent. January of last year, meanwhile, saw lower VoPI and VaPI gains of 14.9 percent and 13.7 percent, respectively.
Socioeconomic Planning Secretary Ernesto Pernia, in a statement, traced the growth to petroleum, construction-related goods, some export-oriented products and food manufacturing.
“Manufacturing output is expected to sustain growth in 2018 on the back of robust consumer demand, higher government consumption and continued gains in investments,” he said.
Sustained global trade growth will also provide an additional boost, particularly for export-oriented sectors.
Pernia said the outlook for the first quarter of 2018 remained optimistic as an improvement in production capacity, new product lines and enhanced marketing strategies were expected to increase both production and sales.
Consumer demand is also expected to pick up with an increase in household incomes due to the Tax Reform for Acceleration and Inclusion (Train) law.
Pernia, however, noted that companies remained cautious given risks from 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,” he 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.”
Pernia added that improving connectivity among production sites, processing areas and markets, and continuing to pursue bureaucratic and regulatory reforms to reduce the cost of doing business must also be pursued.
Sought for comment, Security Bank economist and Assistant Vice-President Angelo Taningco, said the latest data boded well for manufacturing following a contraction over the past four months.
“My outlook for the manufacturing sector is positive since I expect the sector to post bigger production this year, to be induced by rising product prices, strong external demand for locally-made manufactured items and government’s support via its industrial policy,” he added.