PH manufacturing sector dips further in July

MANILA, Philippines – Due to the continuing weakness in global demand, the Philippine manufacturing sector contracted slightly in July 2015, the National Economic and Development Authority (NEDA) reported Thursday, September 10.

Based on the Philippine Statistics Authority’s (PSA) Monthly Integrated Survey of Selected Industries for July 2015, the manufacturing sector’s Volume of Production Index (VoPI) contracted by 0.5%, from 1.6% June 2015, and 3% in May.

The Value of Production (VaPI) also contracted by 6.9% along with its 3-month moving average, which posted a 7.5% drop.

But production volume remains a contrast from its 7.6% growth last year on the same month with its 3-month moving average posting a drop of 1%.

In view of the latest figures, NEDA chief Arsenio M. Balisacan called for diversification to ensure the quality the country’s export-oriented products, which he said “is the key to surviving the continuing weak global demand and stiffer competition in the global market.”

“Providing adequate and efficient infrastructure is a must to be able to provide reliable and cost-effective logistics and transport requirements for manufactured goods and other related services,” the Cabinet official said.

He added the government remains optimistic about the manufacturing sector for the rest of the year as the incoming holiday season will boost both production and sales.

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

Consumer goods

For consumer goods, the volume and value of net sales for beverages began to recover from its double-digit drop in May 2015, posting an increase of 7.9% and 17.4%, respectively. 

Tobacco also continued its double-digit growth in volume and value of net sales at 14.7% and 15.8%, respectively.

But the food sub-sector continues to fall, posting a 20.4% and 20.1% drop in volume and value of production, while its net sales volume and value dropped by 16% and 17.4%, respectively.

The 32.1% 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.

For intermediate goods, non-metallic mineral products sustained double-digit, year-on-year growth in production and net sales by 19.8% and 20.2% in volume and 13% and 13.3% in value, respectively.

The continuing growth in this sub-sector is backed by the steady demand from the private and public sectors for construction-related materials.

For capital goods, transport equipment is leading the growth in net sales by 31.5% and 28.8% in volume and value, with fabricated metal products coming in second with 16.3% and 18.8% respectively. The growth in these sub-sectors can be attributed to the increasing demand for logistics from local industries.

Domestic demand

Given the weak global demand, it is important to continue to stimulate domestic demand to fuel the manufacturing industry, Balisacan said.

In the short- to medium-term, this can originate from the demand for housing and infrastructure. Thus, 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.

In terms of transport logistics, Balisacan said there is a need to implement coordinated, effective, and innovative traffic schemes to maximize the capacity of existing infrastructure and road networks.

He said this is needed especially in the short-run, to support the growing passenger car sales and brisk-economic activities in manufacturing sub-sectors while major improvements in infrastructure and transport services are being worked out.

“Alleviating the traffic and transport woes of the country will not only benefit the people but the economy as well by attracting foreign and domestic investments for the manufacturing and services sectors,” Balisacan said. – Rappler.com