Moody’s Analytics says factory output eased in February

MANILA, Philippines - A unit of Moody’s Corp. said factory output growth in the Philippines further eased in February amid rising oil prices.

Moody’s Analytics said industrial production growth slowed down to 8.7 percent in February from 9.3 percent in January.

“The domestic economy continues to drive the rapid increases in manufacturing output as infrastructure projects and rising incomes support demand,” it said.

Latest data from the Philippine Statistics Authority showed the volume of production index grew at a slower rate of 9.3 percent in January from 23 percent in December.

The value of production index for manufacturing likewise grew at a slower pace of 11.6 percent in January from 19.4 percent in December.

The National Economic and Development Authority said domestic manufacturing grew at a slower pace in January as firms remained cautious on rising prices of oil and raw materials as well as the weakening peso.

“Firms remain cautious on some risks to growth such as rising oil prices, increased cost of raw materials due to peso depreciation, and higher interest rates,” Socioeconomic Planning Secretary Ernesto Pernia said earlier.

He said companies, however, remain optimistic because of the high business activity in the country brought about by expansions and construction activities.

“The outlook of industry firms for the first quarter of 2017 remains optimistic as business expansion, higher energy sales, and implementation of construction projects are anticipated,” Pernia said.

The sustained growth in factory output, he said, reflects the increase in exports that, in turn, indicates recovery in the global economy and increased trade in emerging markets.

“These signal that the global economy is improving. Increased trade in emerging markets like China and Russia have definitely contributed to production growth of Philippine exports,” Pernia said.

Moody’s Analytics said global conditions have become more supportive of manufacturing, as evidenced by the improvements in merchandise exports from the Philippines that began 2017.