Joint FMIC- UA&P report also sees inflation easing further
STRONG jobs data and tame inflation must have largely helped fuel a robust Philippine economy in the first quarter of the year, a joint think tank report said.
First Metro Investments Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said in their joint April issue of The Market Call that strong job creation in the country continues to overshadow other economic data as this is likely to lead to higher consumption and investment spending.
“The January 2015 employment figure marked the fourth consecutive quarter when net new jobs created breached the 1-million target, pointing to a stronger Philippine job market,” they said.
Employment showed encouraging growth of 2.8 percent in January, pushing total employment to 37.5 million from the 36.4 million recorded a year earlier.
The think tank noted that the massive boost in employment can be traced to strong growth in the services sector, as well as in industrial and the agricultural sectors, which signal a promising labor performance that the national government hopes will benefit the poor.
“The national government aims to reduce poverty by facilitating the creation of more and better quality jobs, and in effect higher incomes,” it said.
The government is scheduled to report first-quarter economic growth data on May 28.
Inflation to ease
Meanwhile, FMIC and UA&P said headline inflation is likely to trek downward, with stable food prices and soft fuel prices in the horizon.
“We believe that inflation in 2015 will easily fall within the 2 percent to 4 percent target, since we expect a very low price environment in WTI [West Texas Intermediate] and Dubai crude oil prices to remain for the rest of the year while food prices would be stable,” they said.
Inflation in the first three months of 2015 eased further to 2.4 percent given the slower increases in both food and non-food prices.
The central bank forecasts headline inflation in April to settle within its target range of between 1.9 percent and 2.8 percent as it sees subdued rice prices offsetting the mild rise in energy prices.
The Philippine Statistics Authority is expected to announce April inflation data in the first week of May.
Meanwhile, the think tank stressed that a slight recovery in Meralco sales and expectations of higher government spending are also boosting expectations for another strong quarter performance.
“Meralco electricity sales recovered from a two-month slump (December 2014 and January 2015), indicating that there is more zip in the economy than naysayers think,” it said.
Lastly, FMIC and UA&P said it is also likely that more economic activity is occurring in the provinces where local governments have even more fiscal space to take advantage of ahead of the 2016 elections.