PHL factory output falls on weak global demand, El Niño – NEDA

Philippine manufacturing output contracted in May due to weak global demand and prolonged dry spell, the National Economic and Development Authority (NEDA) said Friday.

 

Manufacturing output shrank by 3.1 percent, compared with a 12.7 percent expansion a year earlier, according to preliminary estimates by the Philippine Statistics Authority (PSA).

 

The monthly integrated survey of select industries reflects steep declines in footwear and wearing apparel at 19.2 percent, wood and wood products at 18.4 percent, basic metals at 16.0 percent, food at 13.9 percent and beverages at 10.2 percent.

 

The production value declined by 7.3 percent from 11.4 percent, mainly dragged by a two-digit decreases in wood and wood products, furniture and fixtures, petroleum products, footwear and wearing apparel, basic metals, food and electrical machinery. 

 

The volume of net sales also dropped 7.7 percent compared with a 9.2 percent growth. The value has been falling since December.

 

NEDA, however, maintains an upbeat outlook for the manufacturing sector this year.

 

"The low inflation environment, lower oil prices, continued inflow of remittances, expected strong demand from government expenditures and the brisk business activity in the coming election season will all help improve the sector's performance in the coming months," NEDA Officer-in-Charge Emmanuel Esguerra said.

 

The average capacity utilization of manufacturing firms was at 83.3 percent, leaving the industry room for expansion.

 

"With the proper implementation of the Competition Law and the Philippine Archipelagic Sea Lanes Act, we expect improvement in the business climate. Also, the Comprehensive Automotive Resurgence Strategy will attract much needed foreign investments and spur growth in the transport equipment sector as well as in textiles, glass, rubber and plastics, electronics and other related products," Esguerra noted.

 

The Bataan Refinery Master Plan 2 of Petron Corp., which started operations in the second quarter, will particularly buoy petroleum output and net sales value – which declined by 23 percent and 29 percent, according to NEDA.

 

"Efforts to pursue higher-value products and processes and new markets must be encouraged to maintain competitiveness and to compensate for the fragile export performance of the manufacturing sector," said Esguerra.

 

Small and medium enterprises must be empowered to participate in the global value chain, maximize the benefits of free trade and minimize vulnerability to uncertainties in the global market while taking advantage of the ASEAN economic integration, the official said.

 

"Long-term measures such as reliable water supply must also be put in place to fend off the possibility of another dry spell in the second half of 2015. The integration of agriculture and the manufacturing sectors, supported by efficient transport infrastructure, will be needed to spur growth," he added. – Keith Richard Mariano/VS, GMA News