File photo by Agence France-Presse
MANILA, Philippines – Hitting a 15-month high, the manufacturing sector’s output recovered in March 2015, thanks to both recovered production volume and value, the National Economic and Development Authority (NEDA) reported Tuesday, May 12.
The Volume of Production Index (VoPI) posted a double-digit year-on-year growth at 13.6%. The Value of Production (VaPI) recovered from its negative position with 7.4% in the same period.
The March recovery was the fastest since the 22.8% growth in December 2013. The growth is also major turnaround from February slump of 0.8% and January slow growth of 3.3% for VoPI and 1.8% decrease for VaPI.
Manufacturing, along with tourism are seen to provide more jobs to the country’s population, Economic Planning Secretary Arsenio M. Balisacan earlier said.
The Board of Investments also reported in April that the manufacturing sector posted the biggest growth among sectors in the first quarter of the year, as investments skyrocketed by 517% to P12.90 billion ($287.62 million) from P2.08 billion ($46.40 million) in 2014.
The surge in manufacturing projects reflects the results of the initiatives of the Manufacturing Resurgence Program (MRP), a government priority program initiated to push for a 30% increase in Gross Value Added (GVA) and a 15% increase in employment by 2025.
The latest growth story is fueled by the strong production performance of the majority of the sub-sectors, led by the double-digit growth of tobacco, basic metals, and petroleum.
For consumer goods, production value of tobacco and beverages continued to be vigorous all through the first quarter, attributed to the implementation of uniform excise tax on local and foreign cigarettes.
For intermediate goods, production values in all except for wood products expanded year-on-year, driven by petroleum, chemicals, and textile.
Petroleum posted a 60% growth in production value and a 95.9% growth in production volume.
For capital goods, growth in basic metals and transport production, particularly in non-ferrous metals, iron, and steel was able offset the performance of fabricated metal products and machinery, including electrical.
Growth in chemicals, leather products, tobacco manufactures, and chemical products boosted the Value of Net Sales (VaNSI) in March 2015, offsetting the performance of printing, beverages, and petroleum products.
Meanwhile, the average capacity utilization rose in March 2015 to 83.5%, higher than the first quarter average in the previous year of 83.1% and the overall 2014 average of 83.4%.
“The rise in average utilization levels this month may be a result of increased activity in manufacturing and construction,” Balisacan said.
He added that the growth in transport is mainly due to the government’s refleeting program which amplified the demand from the public utility sector."
Promising first quarter
Overall, bright prospects are seen on the back of the first quarter recovery in manufacturing.
Balisacan said the March rebound suggests a promising first quarter manufacturing performance.
“The Philippine business sector maintains expectations of favorable performance in the near-term and growth drivers in the past year are expected to perform positively in the next period,” he added.
Robust private consumption fueled by continued inflow of remittances will thrive in the current low inflation environment, he added.
The low global oil prices sustaining low inflation as well as Philippine business optimism will drive businesses to capitalize on low cost of production, Balisacan said.
The government will also continue to pursue efforts to improve the investment climate to attract business expansion as well as new investments in the manufacturing sector.
Balisacan added the full implementation of government efforts to resolve supply chain gaps and integrate sectors through the Comprehensive National Industrial Strategy will also contribute to maximizing manufacturing’s growth potentials.
Overall, diversification of products and markets is vital for the country to maintain its presence globally amid the low demand from the country’s major trading partners, Balisacan said. – Rappler.com
$1 = P44.83