PH manufacturing drops further in June

MANILA, Philippines – Sustained decrease in global demand and business interruptions during the rainy season continued to adversely affect the manufacturing sector in June 2015, the National Economic and Development Authority (NEDA) said Tuesday, August 11.

Based on the Philippine Statistics Authority’s Monthly Integrated Survey of Selected Industries for June 2015, the manufacturing sector’s Volume of Production Index (VoPI) contracted further by 3.6% from a 2% drop in May – a reversal from 2014’s double-digit growth of 12.7% for the same month.(READ: PH manufacturing slowdown continues in May)

The Value of Production (VaPI) declined by 7.3% year-on-year for this period.

The average capacity utilization is sustained at 83.3% in June.

For consumer goods, the volume and value of net sales in furniture and fixtures grew by 61.4% and 37.6%, respectively, in June 2015.

The year-on-year growth for tobacco volume and value of net sales continued to climb at 10.9% and 11.9%, respectively.

As for intermediate goods, production and net sales of non-metallic mineral products demonstrated a double-digit year-on-year growth of 28.5% and 24.5% in volume and 18.7% and 14.9% in June 2015, respectively. The growth in this sub-sector is due to the increasing demand from infrastructure-related government projects and the growing tourism, information technology, and business process outsourcing industry.

For capital goods, the collective double-digit year-on-year growth of net sales value and volume for fabricated materials (21.4% and 17.4%), machinery (11.2% and 10.4%), and transport equipment (12.1% and 10.3%) in net sales production cancelled out the steep decline in basic metals.

The food sub-sector continued its double-digit year-on-year drop of 12.5% and 12.7% in volume and value of production, respectively, suffering from the effects of the declining world milk prices as well as reduced imports from China and ban in Russia.

Remaining optimistic

Despite the continous decline, business expectations across sectors remain optimistic. 

Household consumption is expected to be strong, driven by sustained inflow of remittances and election-related spending.

“These will then boost domestic demand and support growth in the manufacturing sector,” said Economic Planning Secretary Arsenio M. Balisacan.

There is also sustained positive outlook for the construction-related sectors, backed by brisk construction activities, fueled by the growth of tourism, continued implementation of infrastructure-related government projects, and robust information technology and business process outsourcing,” the Cabinet official said  and added that this will result in additional demand for offices and other facilities, housing spaces, roads, and bridges.

“Furthermore, low inflation environment and continuous decline in oil prices are expected to keep construction costs at minimal level,” Balisacan added.

Balisacan said pursuing consistent and responsive policy initiatives for MSMEs (micro, small, and medium enterprises) to increase their participation in the global value chains and manufacturing activities is a must to buoy the sector. – Rappler.com