PH manufacturing slowdown continues in May
MANILA, Philippines – Weak global demand and the prolonged dry spell slowed down manufacturing production in May, the National Economic and Development Authority (NEDA) said on Friday, July 10.
Manufacturing contracted by 3.1% in May in terms of volume, from 1.4% growth in April, and from last year’s 12.7% growth, according to the Philippine Statistics Authority’s Monthly Integrated Survey of Selected Industries (MISSI).
In terms of value, the sector contracted by 7.3% in May from 11.4% growth in the same month in 2014.
NEDA Officer-in-Charge and Deputy Director-General Emmanuel Esguerra said in a statement that businesses "remain optimistic" despite the "slowdown" in manufacturing.
"The low inflation environment, lower oil prices, continued inflow of remittances, expected strong demand from government expenditures, and the brisk business activity in the nearing election season, will all help improve the sector’s performance in the coming months,” Esguerra said.
NEDA said that the 3-month average of the sector's value and volume "remains at a positive position" of 4% despite the continued downward trend.
The average capacity utilization of manufacturing firms slightly grew to 83.3% year-on-year, with 25.4% operating at full capacity (90-100%), 56.4 % at (70-89%) and 18.2% operating at below (70%) capacity, it added.
NEDA also said the food subsector took a double-digit year-on-year drop of 13.1% in the production and net sales value in May, from 6.6% growth in the same month in 2014.
Petroleum production and net sales value also plunged by 23% and 29%, respectively, in May, the state agency said.
Esguerra said, however, that the petroleum subsector is expected to rebound, citing "the imminent operation of the Petron’s Bataan Refinery Master Plan 2 by the end of the second quarter."
"The facility will be the first to produce high value fuels in compliance with the Euro-5 standard, which will augment both local and export supplies," he said.
Electrical machinery, the country’s top export product, also contracted in both production and net sales value and volume due to less exports to China and Singapore.
Esguerra expressed confidence that the "proper implementation" of laws such as the Philippine Competition Act, which is awaiting President Benigno Aquino III's signature, and the Philippine Archipelagic Sea Lanes Act would help boost the business climate.
He said that the Comprehensive Automotive Resurgence Strategy "will attract much needed foreign investments and spur the growth of transport equipment sector as well as textiles, glass, rubber and plastics, electronics and other related products."
The NEDA official stressed the need to encourage efforts to pursue higher-value products and processes and new markets "to maintain competitiveness and to compensate for the fragile export performance of the manufacturing sector."
He said small and medium enterprises "should be enhanced to enable them to participate in the global value chain, maximize the benefits of free trade, and minimize their vulnerability to uncertainties in the global market, as well as take advantage of the upcoming ASEAN economic integration."
Esguerra also cited the need for long-term measures such as reliable water supply "to battle 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. – Rappler.com