Beats 5.2% forecast by Moody’s Analytics
PHILIPPINE manufacturing output increased 13.6 percent in March from a year earlier in volume terms and was up 7.4 percent by value, with more than half of the major sectors posting significant increases, the Philippine Statistics Authority (PSA) said on Tuesday.
The results beat the 5.2 percent manufacturing output growth forecast by Moody’s Analytics.
In its latest Monthly Integrated Survey of Selected Industries (MISSI), the PSA said the double-digit increase in the volume of production index (VoPI) in March was the fastest in 15 months since the 22.8 percent growth recorded in December 2013. In March last year, VoPI shrank by a negligible 0.02 percent year-on-year.
The PSA said eight of the 14 major sectors registered growth led by petroleum products followed by basic metals, tobacco products, chemical products, textiles, printing, beverages, and leather products.
Meanwhile, the 7.4-percent increase in the value of production index (VaPI) in March was also its fastest growth in nine months since June last year, when it expanded by 10.1 percent. VaPI in March last year inched up by a minimal 0.03 percent.
The PSA said nine major sectors that mainly influenced the increases in VaPI were: posted tobacco products, basic metals, petroleum products, textiles, chemical products, beverages, printing, rubber and plastic products, and leather products.
The National Economic and Development Authority (NEDA) said the rebound in the March manufacturing output in volume and value terms suggests a promising first quarter manufacturing performance.
“The Philippine business sector maintains expectations of favorable performance in the near term and growth drivers in the past year are expected to perform positively in the next period,” Socioeconomic Planning Secretary Arsenio Balisacan said in a statement.
For consumer goods, the agency said the production value of tobacco and beverages continued to be vigorous all through the first quarter, which is attributed to the implementation of a uniform excise tax on local and foreign cigarettes.
For intermediate goods, production values in all except for wood products expanded year-on-year, driven by petroleum, chemicals, and textile. Petroleum posted a 60-percent growth in production value and a 95.9-percent growth in production volume.
For capital goods, growth in basic metals and transport production, particularly in non-ferrous metals, iron and steel was able to offset the performance of fabricated metal products and machinery including electrical, NEDA said.
“The growth in transport is mainly due to the government’s re-fleeting program which amplified the demand from the public utility sector,” said Balisacan, who is also the NEDA director general.
Overall, the agency sees bright prospects on the back of this first quarter recovery in manufacturing.
“Robust private consumption fueled by continued inflow of remittances will thrive in the current low inflation environment. The low global oil prices sustaining low inflation as well as Philippine business optimism will drive businesses to capitalize on the low cost of production,” said Balisacan.
Meanwhile, the MISSI report showed that production capacity utilization in March for all forms of manufacturing stood at an average 83.5 percent, with 10 of the 20 major industries registering capacity utilization rates of 80 percent or more.
NEDA said the rise in average utilization levels this month may be a result of increased activity in manufacturing and construction.
Net sales by volume and value also grew during the month. The volume of net sales index in March rose 7 percent while the volume of net sales index advanced by 1.2 percent.
High growth due to base effect
A private analyst, however, gave a different view on the high factory output growth figures in March, saying that the impressive numbers this year were mainly due to the low base effect from last year.
“The higher manufacturing growth in March is mostly attributed to the base effect.
In 2014, the value of production year-on-year growth in March was less than 0.1 percent while volume of production even contracted slightly. The high gainers in March 2015, particularly petroleum, chemicals, and basic metals, also surged because of the base effect,” Mabellene Reynaldo, research analyst at Metrobank Research, said.
Metrobank Research expects production value and volume growth figures to be slower in the second half of the year given the much higher base in the second half last year, she added.
“Volume growth will likely be solid given improving external demand; however, production value may be dampened by soft commodity prices,” she said.