Manufacturing likely contracted again in August

Manufacturing output likely contracted for the second straight month in August even as both domestic and global demand remained strong, the research arm of Moody’s Corp. said.

“The Philippines’ industrial production likely remained downbeat in August and fell by 2 percent year-on-year following a 1.1-percent drop in July. High base effects are at play as domestic demand is doing well and global manufacturing demand is upbeat,” Moody’s Analytics said in a report Friday.

The government will release August manufacturing and trade data tomorrow.

Moody’s Analytics’ projected decline in the volume production index (VoPI) for August will reverse the 13.4-percent growth posted in the same month last year.

“The weak peso hasn’t provided the expected lift to exports and manufacturing yet, but rather has undesirably raised the import bill,” Moody’s Analytics said.

The peso started its slide to the 50:$1 level in mid-June, hitting 11-year lows of 51 to a greenback during the third quarter.

But Moody’s Analytics expressed optimism that “the near-term outlook is for continued expansion” in the domestic manufacturing sector.

Last week, global research firm IHS Markit reported that while the Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI) inched up to 50.8 in September, it reflected “continued subdued growth of the manufacturing economy” for the second straight month.