Factory output expands 5.1% in March

Food production recovers from El Niño

MANILA, Philippines – The country’s factory output expanded 5.1 percent in March as growth continues to normalize after a surprising jump in January, Moody’s Analytics said.

The Moody’s unit said the growth of Philippine industrial production likely grew 5.1 percent in March from a growth of 8.4 percent in February.

Industrial production recorded a dramatic 34.3 percent gain in January.

“The main driver of the strong growth in 2016 has been the revival in food manufacturing. This will continue in the coming months with crop yields recovering as the effects from a severe El Niño climate pattern dissipate,” Moody’s Analytics said.

In the Philippine Statistics Authority’s Monthly Integrated Survey of Selected Industries for February 2016, the Volume of Production Index (VoPI) grew 8.4 percent, a turnaround from the 2.1 percent decline recorded in February 2015.

Similarly, the Value of Production Index (VaPI) recorded a modest growth of 2.8 percent, rebounding from the 7.6 decline recorded in the same period last year.

Socioeconomic Planning Secretary Emmanuel Esguerra said the manufacturing sector is expected to sustain growth this year because of strong macroeconomic fundamentals, resilient domestic consumption as well as the May 9 national elections.

“There is a positive business outlook due to anticipated increases in gross revenues and net income of some of the country’s largest corporations,” he said.

Esguerra, who is also director general of the National Economic and Development Authority (NEDA), said this scenario increases the availability of jobs while stable prices of commodities, government assistance such as the Pantawid Pamilyang Pilipino Program (4Ps), and election-related spending would also provide additional boost to domestic consumption.

For consumer goods, furniture and fixtures recorded strong growth on the back of robust domestic demand, posting an increase in volume of 32.4 percent and value of 13.2 percent in February 2016.

Likewise, the food subsector sustained double-digit growth in February, posting a 26 percent and 25.8 percent growth rate in volume and value of production, respectively.

“Driven by strong consumer spending and efficient distribution of goods, the growth in food production is expected to continue in the coming months as El Niño is anticipated to weaken and fade away during the second quarter of 2016,” he added.

For intermediate goods, rubber and plastic products posted a double-digit growth of 25.6 in volume and 1.5 percent growth in value of production. For capital goods, electric machinery grew by 16.3 and 8.3 percent in volume and value, respectively.

With low global oil prices, the NEDA chief said lower production costs would encourage expansion of manufacturing production.

“Thus, to maximize low oil prices, the government must ensure that stable macroeconomic fundamentals are sustained and measures to further reduce cost of doing business are continually pursued. Also, access to high-quality raw materials and reliable energy, logistics and other manufacturing-related services must be available to support robust growth of manufacturing output,” he said.