PH factory output slows in April

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The Philippines’ total industrial output moderated in volume and value in April, traced to a slowdown in key sectors such as food manufacturing, leather products, and non-metallic mineral products, official data released on Friday showed.

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The slowdown in these sectors could not be offset by sustained production of petroleum products, transport equipment, and basic metals, government data showed Friday, as shown by figures from the Philippine Statistics Authority (PSA).

The overall Volume of Production Index (VoPI) rose 5.9 percent in April 2017, slowing from 12.8 percent in March and 10.1 percent in April 2016, the latest Monthly Integrated Survey of Selected Industries (MISSI) released by the PSA said.

MISSI is a report that monitors the production, net sales, inventories, and capacity utilization of selected manufacturing establishments to provide flash indicators on the performance of the manufacturing sector.

The Value of Production Index (VaPI) increased 3.7 percent in April, decelerating from 12.1 percent in March and 6.1 percent in April 2016.

Key sectors decelerate

Growth in output volume of the food manufacturing sector moderated to 11 percent in April from 18.3 percent in March, while leather products production slowed to 7.3 percent from 33.9 percent.

Non-metallic mineral products output volume growth eased to 5.5 percent in April from 17.6 percent in March.

Outlook remains positive

The National Economic and Development Authority (NEDA), however, remained positive about manufacturing output forecasts despite seeing slower growth this April.

“Despite the slowdown at the onset of the second quarter, manufacturing output is expected to sustain its growth following anticipated increases in demand during the harvest season and the enrolment period in schools,” Socioeconomic Planning Secretary Ernesto Pernia said in a statement released also on Friday.

Growth in manufacturing output in the first month of the second-quarter 2017 is attributed to sustained production of petroleum products, transport equipment, and basic metals posting double-digit increases, the statement said.

In particular, petroleum products posted a 51.7 percent increase in production due to higher demand for gasoline from Vietnam, Japan, Saudi Arabia, Malaysia and Indonesia, it said.

“Demand for diesel is expected to increase as governments in the Middle East stock up for the Ramadan season,” Pernia said in the statement.

Also, the double-digit increase in the production of basic metals at 28.5 percent sustained growth in construction-related manufactures.

“The government’s ‘Build Build Build’ infrastructure program is anticipated to further increase construction activities in the country, which will provide additional boost to the manufacturing sector,” Pernia said.

To sustain growth in the manufacturing sector, research and policies must be pursued to increase product innovation, enhance investor confidence, and strengthen linkages across production sectors, he added.

IHS Markit Asia Pacific chief economist Rajiv Biswas said despite the moderation in output in April, the outlook is for some improvement in momentum for manufacturing output in the near term.

Referring to IHS’s outlook for May manufacturing output, issued last week, Biswas said: “The Nikkei Philippines Manufacturing Purchasing Managers’ Index produced by IHS Markit rose from 53.3 in April to 54.3 in May, signaling an upturn in manufacturing output growth with stronger new orders and output boosted by strong domestic demand.”

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