INDUSTRIAL output grew at a slower pace in terms of volume but value surged in February with expansions recorded in the production of petroleum products, transport equipment, basic metals and other major sectors, government data showed Tuesday.
The Volume of Production Index (VoPI) increased by 10.7 percent in February, slower than the 11.6 percent a year earlier, the latest Monthly Integrated Survey of Selected Industries (MISSI) released by the Philippine Statistics Authority (PSA) showed.
At the same time, the Value of Production Index (VaPI) rose significantly, by 13.6 percent from 5.4 percent.
For consumer goods, furniture and fixtures posted a double-digit growth of 21.9 percent in volume and 16.6 percent in value of production, while food manufactures grew in volume and value of production, by 20.6 percent and 19.3 percent, respectively, according to the National Economic and Development Authority (NEDA).
For intermediate goods, petroleum products soared in both volume and value of production, registering a double-digit growth of 47.1 percent and 95 percent and recovering from a contraction in the same period last year.
NEDA said wood and wood products grew by 19.5 percent and 21.2 percent in volume and value, while non-metallic mineral products grew by 26.3 percent and 20 percent, respectively.
“This is a positive response to the government’s and private sector’s continuous efforts to ramp up infrastructure, as well as the increasing demand for housing from our expanding middle-class population,” said Socioeconomic Planning Secretary Ernesto Pernia.
The NEDA also noted that the increase in production of construction-related manufactures was bolstered by the positive year-on-year growth in the construction materials wholesale price index, at 4.0 percent in February 2017.
Pernia stressed that need to double efforts to strengthen the manufacturing sector and help it realize its full potential.
“The sector is expected to benefit from an investment-led growth supported by stable inflation, increased spending on infrastructure and rural development, strong private consumption, and continued gains in overseas remittances,” he said.
Encouraging firms to utilize science, technology and innovation to help them keep up with increasing domestic and regional demands is also a must, he said.
“We must empower micro small and medium enterprises to participate in the global market by enhancing their access to technology that will help them achieve economies of scale and enhance their capacity to meet the international demands in terms of quality and quantity,” said Pernia.
In its Philippine Economic Update, the World Bank said increased manufacturing activities in 2016 will likely spillover into 2017, but investment in productive capacity will be necessary for further output increases in the sector.
“The country’s manufacturing sector, which expanded by 7.0 percent year-on-year in 2016, is expected to sustain its growth momentum in 2017,” it said.
The Washington-based multilateral lender said the purchasing managers’ index remains upbeat and points to continued growth in factory activities in 2017, while business confidence also high as firms anticipate robust market demand, new product releases, and an improvement in production capacity.
To sustain the sector’s strength, the World Bank pointed to the “servicification” trend in manufacturing, adding that policies designed to support a resurgence in manufacturing must have a services-development component.
“Without efficient services, the Philippines will not be able to compete internationally or establish new ties to global production networks,” it said.
The World Bank explained that key sectors such as apparel are experiencing a global value chain (GVC) consolidation, as GVCs are becoming shorter and involving fewer actors. Meanwhile, an expanding range of sectors requires services as a necessary condition for investment.
“Moreover, innovation in the services sector is vital to compete in the crowded middle ground of the product space. In this context, it is no longer possible for a country to specialize exclusively in manufacturing,” it said.
The development of a robust services sector, coupled with the adoption of new technology, can enable countries to enter new value chains and compete in new industries, it said.