INDUSTRIAL output grew faster in volume and value in March with expansions recorded in the production of fabricated metal, petroleum products and other major sectors, government data showed Wednesday.
The Volume of Production Index (VoPI) increased by 11.1 percent in March, faster than the 8.2 percent a year earlier, the latest Monthly Integrated Survey of Selected Industries (MISSI) released by the Philippine Statistics Authority (PSA) showed.
The Value of Production Index (VaPI) rose by 12.2 percent from 0.8 percent.
In February 2017, the VoPI posted grew by 11.6 percent and the VaPI by 12.2 percent.
Consumer goods and food manufactures grew by 23.4 percent in volume and 20.0 percent in value of production, The National Economic and Development Authority (NEDA) said.
NEDA Officer in Charge and Rolando Tungpalan said it was due to the sustained domestic demand for basic goods, particularly food and beverages.
For intermediate goods, petroleum products soared in both volume and value to register growth of 61.5 percent and 94.9 percent, recovering from contractions a year earlier, NEDA.
Fabricated metal products went up by 74.4 percent in volume and 15.1 percent in value, and transport equipment sustained its momentum.
The increase in production of construction-related manufactures was backed by the demand for residential and commercial development and increased spending on public infrastructure, Tungpalan added.
He said the government must continue to foster a competitive and innovative environment to help the manufacturing sector realize its full potential as growth driver.
“The sector is expected to benefit from the sustained growth economic momentum and increasing infrastructure and human capital investments. It can also benefit from the country’s ‘BBB-’ or ‘good quality rating’ with a positive outlook for both foreign and local currency denominated obligations,” he added.
“This momentum signals the desire of the sector to support the government’s ambitious infrastructure development program. As such, we must push for the adoption of innovative technological advancements to increase the productivity of local producers and enterprises,” said Tungpalan.
The NEDA Official also warned of the risks to inflation as well as possible external risks.
“We must keep diversifying our market and increase our attractiveness to investors by addressing legal impediments that restrict foreign participation, minimizing regulatory burden, and reducing the cost of doing business in the country,” said Tungpalan.
Tungpalan is overseeing the NEDA while Socioeconomic Planning Secretary Ernesto Pernia is on official travel for the World Economic Forum in Cambodia.
Analysts have a positive near-term outlook on Philippine manufacturing.
Citing PSA data, Rajiv Biswas, Asia-Pacific chief economist at IHS Markit, noted the strong gains in manufacturing output were led by a 94.9 percent rise in petroleum products output reflecting the doubling of current world oil prices from early 2016.
“The near-term outlook for the Philippines manufacturing sector remains buoyant, driven by strong growth in domestic demand,” he said.
Biswas noted that the latest Nikkei Philippines Manufacturing Purchasing Managers Index produced by IHS Markit was at 53.3 in April, a robust pace of manufacturing output expansion with strong new orders.
However, he said there were significant pockets of weakness.
“Notably, output of electrical machinery, which fell by 4.4 percent year-on-year in value terms and by 3.6 percent in volume terms. Output of textiles also fell sharply in March, dropping by 37 percent year-on-year in value terms and by 33.6 percent year-on-year in volume terms,” Biswas said.
Guian Angelo Dumalagan, market economist at Land Bank of the Philippines, said industrial production expanded at a double-digit pace in March 2017 due to a recovery in global oil prices and upbeat economic conditions in the country.
“Production of petroleum products surged, tracking the rise in oil prices, while that of food manufacturing, transport equipment and machinery improved on account of the country’s strong consumer and investment spending,” he said.
Dumalagan said manufacturing output is expected to grow in double-digit terms in April 2017.
“Recovering oil price, improving global demand, and upbeat domestic economic conditions would continue to support the growth of the manufacturing sector,” he said.