Factory output sluggish in October, Moody’s says

MANILA, Philippines—Factory output likely stayed sluggish in October as investments in capital slowed due to the government’s weak spending—indicating that significantly faster economic growth in the fourth quarter may be a long shot.

Moody’s Analytics, a think tank, in a new report said the growth in the amount and value of goods made by local firms likely stayed weak, and that the government was largely to blame.

“Industrial production has slowed down in recent months, mirroring the broader economy’s cooling,” the firm, an affiliate of rating agency Moody’s Investor Service, said.

“Fixed investment from both the public and private sectors has weakened through 2014, partly as a result of the slowdown in government approval of new infrastructure projects,” it added.

Industrial production in October likely grew by 5 percent, or just slightly faster than the rate seen the month before.

In September, the value of products made in the country grew by 3.8 percent, while volume was up by just 3.2 percent.

These growth rates in value and volume were slower than the 10.9- and 19-percent, respectively, seen in the same month the year before.

Exports were one bright spot for factory output, with goods shipped out of the country surging by 15.7 percent in September on the back of strong demand for electronics from overseas.

Electronic goods account for four-tenths of the country’s total exports.

Moody’s said the recovery of advanced companies, particularly major trading partners like the United States, should continue to translate into more demand for exports from the Philippines.

Data out of the United States showed the American economy grew by 3.9 percent in the third quarter, beating the average forecast of 3.3 percent.

Sustained remittances from overseas Filipino workers (OFW) would also likely support domestic demand, which should spell a boon for local producers, Moody’s said.

Data from the Bangko Sentral ng Pilipinas showed overseas Filipino workers’ remittances rose 7.9 percent to $2.107 billion in September.

This was the second-highest level for a single month on record.

The month that saw the highest amount of remittances was December of last year, when inflows reached $2.173 billion.

For the January to September period of 2014, remittances were up 6.1 percent over the same nine months last year.