Manufacturing output shows uptick in Sept.

GROWTH in the manufacturing sector’s output likely remained modest in September due to weak global demand and dry weather, although data would show a slight improvement due to a statistical quirk.

“The Philippines’ industrial production likely improved in September from August’s gain thanks to a lower base effect,” Moody’s Analytics, a think tank, said at the weekend.

For September, industrial production in terms of volume is seen to have grown by 3.9 percent, slightly better than August’s 3.7-percent expansion.

The statistical gain partly hides continued weakness in manufacturing, which continues to face headwinds in the form of El Niño and tepid global conditions.

“Food production remains under pressure from the dry conditions associated with El Niño, while export-facing industries such as electronics production are under pressure from weak global demand, especially from China,” said Moody’s Analytics, which is an affiliate of credit rating firm Moody’s Investor Service.

Forecasts from the government’s weather bureau show the current spell of El Niño’s effects on the Philippines would be the worst since the late 1990s.

Drier-than-usual weather, which is expected to last until June 2016, will put pressure on farmlands and affect the country’s food supply. The country also faces water and power shortages as local dams slowly dry up.

Apart from El Niño, global demand for Asian exports has also slumped. Last week, the US government said the world’s largest economy grew by a slower-than-expected 1.5 percent in the third quarter of 2015.

“We must continuously drive domestic demand to offset the low global demand and strengthen the link between the agriculture and manufacturing sectors to reduce the economy’s vulnerability to external supply shocks,” Socioeconomic Planning Secretary Arsenio M. Balisacan said in a previous statement.

Balisacan said prospects for the manufacturing sector should improve starting October on election-related and holiday spending.

“We remain optimistic for the fourth quarter due to the expected boost in both production and sales of manufactured goods with the coming holiday season, campaign season for the 2016 elections, and the expansion of the business process outsourcing (BPO) industry,” he said.