Manufacturing further shrinks in July

MANILA, Philippines - The country’s manufacturing sector contracted for a third straight month in July due to the continued weakening in global demand, recent data from the Philippine Statistics Authority (PSA) showed.

In its monthly Integrated Survey of selected industries, the PSA said the volume of production index (VoPI) for July declined 0.5 percent although this was much slower than the three percent and 1.6 percent declines in May and June, respectively.

National Economic and Development Authority (NEDA) director general Arsenio M. Balisacan said he remains optimistic the incoming holiday season would help boost production and sales.

“The persistently low oil prices will also aid the industry in the coming months,” he added.

Diversifying and ensuring the quality of export-oriented products of the country is also the key to survive the continuing weak global demand and stiffer competition in the global market, he said.

The value of production index (VaPI) likewise contracted 6.9 percent, resulting in a three-month moving average of a 7.5 percent drop.

Furthermore, the food sub-sector continues to fall with a 20.4 percent drop in volume and 20.1 percent decrease in value of production, as well as net sales volume and value by 16 percent and 17.4 percent, respectively.

“The 32.1 percent drop in production values of milled and refined sugar, together with the declining global demand and prices for dairy products, weighed down the sub-sector,” Balisacan explained.

On the other hand, volume and value of net sales for beverages began to recover from its double-digit drop last May, posting an increase of 7.9 percent and 17.4 percent, respectively.

Tobacco, another consumer good,  continued its double-digit growth in volume and value of net sales with 14.7 percent and 15.8 percent, respectively.

Non-metallic mineral products also sustained double-digit year-on-year growth in production and net sales by 19.8 percent and 20.2 percent in volume and 13 percent and 13.3 percent in value, respectively, on the back of steady demand from private and public sectors for construction-related materials.

In terms of capital goods, transport equipment is leading the growth in net sales by 31.5 percent and 28.8 percent in volume and value, with fabricated metal products coming in second with 16.3 percent and 18.8 percent, respectively, backed by higher demand for logistics from local industries.

Meanwhile, Balisacan noted it is important to continue stimulating domestic demand through housing and infrastructure to fuel the manufacturing industry.

“It is important to ensure that the government’s infrastructure program is implemented on time.  Private investments in housing should also be encouraged, specifically through regulatory reform and better access to housing finance,” he added.