The Philippines’ manufacturing sector recorded a slight decline in output for October 2015 due to the adverse effects of El Niño and continued weakening demand from China, according to the National Economic and Development Authority (NEDA).
In the Philippine Statistics Authority’s Monthly Integrated Survey of Selected Industries for September 2015, the manufacturing sector’s Volume of Production Index decreased 1.8% while its Value of Production Index continued to fall, sliding by 9.2% from its drop of 4.8% in September 2015.
For the holiday season, Economic Planning Secretary Arsenio Balisacan said that driven by strong domestic demand, “business firms are expected to increase production output in anticipation of brisker business activities.” This will translate to higher volume of sales and possible expansion of businesses and product lines, he noted.
For “the months and years ahead, the government expects the manufacturing sector to exhibit stronger growth,” said Balisacan, who is also National Economic and Development Authority (NEDA) director general.
Meanwhile, the Volume of Net Sales Index (VoNSI) and Value of Net Sales Index (VaNSI) posted steep declines of 5.8% and 12.9%, respectively.
For consumer goods, tobacco grew vigorously, posting a triple-digit increase in net sales for the first time following the implementation of tax stamps. Tobacco jumped 129.2% in volume and 131.3% in value of production. It also boasted double-digit growth rates in net sales, increasing 12.3% in volume and 13.4% in value.
In contrast, the food subsector continued to decline in both value and volume of net sales due to the persisting dry spell brought about by the El Niño and the devastation brought about by typhoons Egay, Ineng, and Lando.
For intermediate goods, net sales of wood and wood products continued to increase by 34.1% in volume and 10.1% in value, even as other construction-related materials declined with the decreasing number of non-residential construction permits from July to September.
Petroleum sustained its decline, slipping 11.3% in value and 27.9% in volume of net sales due to oversupply from the United States and the Organization of Petroleum Exporting Countries while global demand remains weak.
For capital goods, basic metals grew by 17.1% in volume and 4.9% in value of net sales. This is attributed to the strong performance of non-ferrous materials, which outweighed further contractions in iron and steel brought about by slowdown in real estate activities in China.
Transport equipment
Transport equipment continued to grow by 6.9% in both volume and value of production due to the increasing sales of commercial and passenger vehicles, with reports from the Chamber of Automotive Manufacturers’ of the Philippines that their members’ overall sales have been experiencing double-digit growth consecutively for 10 months.
“To support brisk economic activity for the coming months and years ahead, government must continue to invest in infrastructure and logistics support to minimize barriers to the smooth flow of goods,” Balisacan said.
He added that the manufacturing sector must aggressively pursue innovation to remain competitive in the domestic market, while maintaining global presence to offset large losses from the economic slowdown in China.
“More importantly, we need to ensure the full completion and implementation of the Comprehensive National Industrial Strategy to strengthen the linkages across all production sectors which will sustain growth and resiliency of the economy despite external and internal shocks,” Balisacan said.
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