PHILIPPINE factory output likely slowed in December last year, the economic research arm of Moody’s Investors Service said, citing the impact of the El Niño on food manufacturers.
Moody’s Analytics is forecasting that manufacturers produced goods at a slower pace of 1.5 percent in December 2015, compared with 7.5 percent in November and 4.7 percent a year earlier.
“Food manufacturing will continue to be a drag on output due to dry conditions affecting crop output,” Moody’s Analytics said in a weekly outlook, ahead of the official data to be released by the Philippine Statistics Authority on Wednesday.
It pointed out that export-oriented manufacturers likely experienced a dent in output because of a slowing Chinese economy.
“This will be offset somewhat by a rise in demand from the United States as its recovery continues,” it added.
Manufacturing output as measured by the Volume of Production Index grew a hefty 7.5 percent in November from a revised 1.7 percent I October. The expansion was attributed to robust demand and improvements in tobacco, non-electrical machinery, basic metals, leather products, electrical machinery, petroleum products, and footwear and wearing apparel.
In a separate report on the VoPI back then, the National Economic Development Authority said it expected the sector to grow further in December on the back of robust domestic demand, higher remittances, stable inflation, and low fuel prices.
“We must aggressively pursue efforts to encourage innovation to help the manufacturing sector realize its potential as driver of economic growth. We have to explore and invest in new technology to enhance existing product base to maintain competitiveness in regional and global markets,” it claimed.