Factory output seen at 8% in July

MANILA, Philippines - Factory output likely grew eight percent in July after a strong rebound in June, a unit of Moody’s Corp. said over the weekend.

Moody’s Analytics said industrial production may have expanded eight percent in July, slower than the 8.5-percent growth in June.

“Strong domestic demand and rapid economic growth will keep production increasing rapidly for the rest of 2016,” Moody’s Analytics said.

The country’s GDP growth accelerated to 6.9 percent in the first half from 5.5 percent in the same period last year after a stronger than expected expansion in the second quarter.

The country’s GDP expansion picked up to seven percent in the second quarter from 6.8 percent a year ago due to election related spending.

“Thriving private consumption and investment in the archipelago have been offsetting the weakness in external demand for Philippine goods,” it said.

Moody’s Analytics said the effects of El Niño on food production are starting to diminish.

“The main drag on production in recent months has been food production, as the severe El Niño climate pattern dented yields. These effects will diminish in the coming months,” it said.

Latest data from the National Economic and Development Authority (NEDA) showed factory output, as measured by the Volume of Production Index (VoPI), rose 8.5 percent in June, reversing a 1.7 decline in June last year.

Production output was higher in basic metals, transport equipment, machinery except electrical, rubber and plastic products, tobacco products, wood and wood products, beverages, and printing.

Production value, as measured by the Value of Production Index (VaPI), also made a turnaround, growing 4.7 percent in June and reversing a 7.9 percent contraction in June 2015.

Socioeconomic Planning Secretary and NEDA director general Ernesto Pernia earlier said the manufacturing sector’s performance during the period reflects sustained domestic demand.

“This signifies an improvement from the subdued growth in 2015 and reflects the sector’s strong production growth since the beginning of the year. The upswing in net sales performance was also a result of sustained domestic demand in the country,” he said.