PHILIPPINE factory output in volume and in value slowed down in March from the previous month and a year earlier but still exceeded the forecast by analysts, according to the latest Monthly Integrated Survey of Selected Industries (MISSI) released by the Philippine Statistics Authority (PSA) on Wednesday.
The volume of production index (VoPI) in March slackened to 7.8 percent from the revised 11.2 percent in February and from the 14.9 percent a year earlier.
The value of production index (VaPI) also moderated to 1.9 percent from the revised growth of 5.6 percent in February, and from the 8.6 percent growth in March 2015.
Earlier this week, Moody’s Analytics, the economic research arm of ratings firm Moody’s Investor Service, estimated that March manufacturing output grew at 5.1 percent in volume terms.
Twelve out of 20 major industries drove VoPI growth, the PSA said. Tobacco products increased by 86.2 percent, followed by non-metallic mineral products (28.5 percent), machinery except electrical (27.8 percent), wood and wood products (24.5 percent), fabricated metal products (18.7 percent), basic metals (17.3 percent), paper and paper products (15.7 percent), food manufacturing (15.3 percent), rubber and plastic products (14.5 percent), and electrical machinery (13 percent).
Meanwhile, 10 major sectors reported VaPI increases, including tobacco products, which increased by 82.6 percent, followed by fabricated metal products (20.1 percent), wood and wood products (16.6 percent), paper and paper products (16.4 percent), and food manufacturing (16.3 percent).
Growth to continue
Despite the slower growth, the National Economic and Development Authority (NEDA) said the positive performance of the manufacturing sector is expected to continue and drive higher growth in the first semester of the year.
“The buoyant domestic demand, stable inflation, low power rates, and continued decline in world crude oil prices will continue to support the growth of the sector, and at the same time, will help cushion the effect of slow global economic growth,” said Socioeconomic Planning Secretary Emmanuel Esguerra.
Esguerra, who is also NEDA director general, added that election-related spending was also providing an additional boost to the production output of paper and plastic products, among others.
On the other hand, the agency said the spike in tobacco production suggests continued robust demand for tobacco products.
Food manufactures also posted strong growth in March, posting an increase of 15.3 percent and 16.3 percent growth rate in volume and value of production, respectively.
“The positive performance of the food subsector is a turnaround from the declines recorded in 2015. This was on the back of a strong domestic economy, lower raw material
prices, better product mix, and improved production efficiencies,” Esguerra said.
Meanwhile, the strong growths posted by tobacco, food manufactures, paper, wood and metal products offset the double-digit declines in petroleum and leather products.
To support the continued growth of the manufacturing sector, the NEDA chief emphasized the need to strengthen linkages between agriculture and manufacturing in strategic locations to create stable employment and reduce dependency on highly vulnerable economic activities.
“We must increase the productivity of agribusiness and manufacturing-related services through continued public investment in research and development. This will boost competitiveness and innovation across all production sectors,” he said.