Exports, factory output weaken in H1

Factory output contracted while exports slid for the third straight month last June due to weak global demand, the government reported Tuesday.

A preliminary report of the Philippine Statistics Authority (PSA) showed that the value of merchandise exports dropped 3.3 percent to $5.28 billion in June from $5.46 billion a year ago.

Last June’s exports decline was a reversal of the robust 21.6-percent growth posted last year, although slower than the 17.4-percent year-on-year contraction in May.

In a statement, the National Economic and Development Authority (Neda) attributed the decline mainly to lower export sales of agro-based goods and minerals even as electronics shipments recovered that month.

“Weak external demand continues to affect the country’s external trade performance, particularly for the merchandise exports sector. Year-to-date outcome, in terms of both value and volume, suggests fragility in the demand, particularly in major trading partners,” Economic Planning Secretary and Neda Director General Arsenio M. Balisacan said.

“This decline reflects a still fragile global economy that is felt across the region. Most of the major economies in East and Southeast Asia also registered negative export performance in June, with only Vietnam and China in the positive territory,” Balisacan added.

The Neda noted that agricultural exports fell sharply for the fifth straight month last June, slipping by 24.9 percent due to lower shipments of coconut and sugar products as well as other fruits and vegetables.

As for minerals, shipments contracted by 26.2 percent in June as copper exports slid alongside “steep declines” in shipments to top mineral export markets China, Switzerland and Thailand, Neda said.

“In addition to the frail demand from major economies, the country’s recent external trade performance is also partly due to an abundant supply of industrial commodities, thus revenues from mineral and agro-based exports are seen to continue to decline in the short-term due to falling prices,” Balisacan explained.

But in the case of electronics, Balisacan said the sector was recovering, citing the 9.5- and 16.9-percent growth in electronic products and semiconductors, respectively, in contrast with the 7.5-percent drop in May.

“The country’s relatively strong semiconductor exports emulated the progress in the global semiconductors market as worldwide sales continued to expand at its 26th consecutive month, as reported by the semiconductors industry association,” Balisacan noted.

Electronics accounted for 46.2 percent of total Philippine receipts in June, according to the Semiconductor and Electronics Industries in the Philippines Inc. (Seipi).

Seipi said exports of electronic products grew 9.46 percent to $2.44 billion in June this year from $2.23 billion a year ago. The positive growth was brought by the increase in six electronic products groups, with medical/industrial instrumentation having the biggest growth rate from the same month last year at 375 percent. Other sectors that posted a positive rate were office equipment at 128.9 percent, telecommunication at 29.8 percent, components/devices (semiconductors) at 16.9 percent, control and instrumentation at 14.1 percent and consumer electronics at 12.2 percent.

Compared to the previous month, electronics exports in June rose at a slower pace of 3.44 percent. On a cumulative basis, exports of electronic products rose 4.04 percent in the first six months of the year to $13.35 billion from $12.83 billion a year ago.

Meantime, manufacturing weakened further in June as factory output as measured by the Volume of Production Index posted a 3.6-percent contraction following the 2-percent drop a month ago, compared with the robust 12.7-percent growth recorded a year ago.

The latest Monthly Integrated Survey of Selected Industries for June also showed that the Value of Production Index slid by 7.3 percent at the end of the first half, reversing the 10.1-percent growth registered last year.

Balisacan nonetheless expressed confidence that despite a slowdown in domestic manufacturing, “business expectations across sectors remain optimistic.”