Factory output down for 4th straight month in March
A factory in the Philippines (INQUIRER FILE PHOTO)
MANILA, Philippines — Factory output contracted for the fourth straight month in March, but the country’s chief economist sees a boost in manufacturing as the summer season kicks in.
In the latest Monthly Integrated Survey of Selected Industries for March by the Philippine Statistics Authority (PSA), the Volume of Production Index (VoPI) fell 9.2 percent that month, reversing the 11-percent jump a year ago.
Revised PSA data showed that VoPI, a proxy for manufacturing output, also slid 9.3 percent in December last year, 2.9 percent in January, and 8.1 percent in February.
Also, the Value of Production Index (VaPI) declined for the second consecutive month last March, with the 5.4-percent drop a reversal of the 10.5-percent growth posted during the same month last year.
In a statement, state planning agency National Economic and Development Authority (Neda) blamed the decline in factory output to “weak growth of food manufacturing, petroleum products, and basic metals.”
Socioeconomic Planning Secretary and Neda chief Ernesto M. Pernia was nonetheless optimistic of manufacturing recovery in the near term ”as we see increase in demand during summer, given the rise in the number of local and foreign tourists, easing of inflation, and increase in election-related spending.”
“Government spending on infrastructure and other government services is also likely to catch up,” Pernia said, with the implementation of the P3.7-trillion 2019 national budget now in full swing after a quarter of delay.
“The extension of implementation and payments for 2019 infrastructure projects beyond the fiscal year must be considered in the enforcement of the cash-based budgeting system. An immediate implementation of a catch-up plan after the passage of the 2019 budget must be pursued to regain the government’s spending momentum. This should, at the same time, counter the impact of the temporary interruption in the implementation of new and ongoing projects as well as funding for social services,” the Neda chief said.
But Pernia said prolonged dry spell due to El Niño may also make it harder for manufacturers.
“The presence of El Niño could easily feed into a hike in power and water rates, which are essential inputs to the manufacturing sector. Fortunately, forecasts point to El Niño weakening starting May to August this year. Upward pressures on domestic oil prices and slight adjustment in electricity rate are expected to exert upward price pressures on the cost of inputs. Nonetheless, the continued decline in the price of rice and peso appreciation may partly be offsetting factors,” he said.
