Factory production maintains growth in September, the lowest in 9 months

By Janina C. Lim
Journalist

The number of factories continued to grow in September, but its pace is the slowest in nine months, according to data released Tuesday by the Philippine Statistics Authority (PSA).

PSA reported that its latest monthly integrated industry survey (MISSI) indicated a 4% increase in its production volume in September, a contraction of 5.7% over the previous year, although its up is the slowest in the last nine months. MISSI is a monthly report that tracks production, net sales, inventories and capacity utilization of key industries to paint a picture of the performance of the manufacturing sector.

The volume growth in September – driven in particular by six industry groups, namely: textiles (44.7%), petroleum products (26.7%), machinery excluding electricity (20.1%). %), miscellaneous manufactured goods (16.5%), transportation equipment (16.2%) and non-metallic mineral products (13.3%) – the average annual increase to 12.3% is over from 3.85% in 2017 to nine months.

The value of MISSI output growth was also strong in September, but was the slowest in nine months, at 3.7%, although still below the 6.2% recorded a year earlier.

In comparison, the Purchasing Managers' Index for the Nikkei Philippines manufacturing sector rose from 51.9 in August to 52 in October and 54 in October, allowing the Philippines to dislodge Vietnam from the bar in Southeast Asia. in the last two months.

"The drop from one month to the next illustrates the impact of the rise in inflation," said chief economist Ruben Carlo O. Asuncion, Union Bank on Tuesday. from the Philippines, Inc. in an e-mail solicited for comment, while Michael L. Ricafort, An Economist of the Rizal Commercial Banking Corp. raised the price of rice and other food products, especially after the typhoon Ompong in the Luzon rice and vegetable producing provinces on 15 September; rising oil prices at the time and a decline in the peso which made imports more expensive.

"Some frontloading of manufacturing activities a few months earlier to avoid / avoid a further rise in inflation / prices could also have partly caused slower growth in the manufacturing sector," Ricafort said Tuesday in a statement. email.

Asuncion said Sino-US trade tensions could also play a role: "Some Philippine exporters supplying Chinese exporters to the US and US exporters to China (directly affected by the trade war) may have affected in terms of slower demand.

Nevertheless, growth in the manufacturing sector has been "sufficiently respectable," according to UnionBank's Asuncion, saying it could help spur third-quarter gross domestic product (GDP) performance, which will be reported on Thursday. "Industry has been one of the main drivers of GDP growth in 2017 and 2018. This year, a lot of the investment is directed [to] manufacturing."

The average utilization rate of capacity was roughly stabilized at 84.2% in September compared with the previous months this year, a little more than the previous year at 83.8% . Petroleum products recorded the highest rate among the 20 industries followed at 89.7%, followed by base metals (89.0%), non-metallic mineral products (86.4%), and non-electrical machinery ( 86.0%), chemicals (85.2%), electrical machinery (85.1%), food industry (84.8%), paper and paper products (83.7%) , rubber and plastic products (83.3%), wood and wood products (81.5%) and textiles (80.3%).

For the National Economic and Development Authority, the 11th recently published^th The negative list of regular foreign investments (RFINL), which opened last week some additional sectors to foreign participation, should "strengthen manufacturing activity in the country in the medium term".

"We hope to maintain this growth momentum thanks to the efficiency of the 11^th RFINL, which allows for increased foreign participation in certain areas and activities. This could facilitate the expansion of production capacity in the manufacturing sector, "said NEDA Executive Director Ernesto M. Pernia, Secretary General for Socio-Economic Planning.

He cited, for example, the opening of foreign participation to 100% of high-level skills training centers in the short term, likely to help provide the necessary skills to industries to strengthen their skills. competitiveness. "We hope that these specialized institutions will be able to upgrade the sector's knowledge, especially in robotics, technical design and additive manufacturing," said Pernia.

In addition, the 25% increase in the foreign equity cap of 25% for locally financed construction and repair contracts for public works should help to strengthen the connectivity needed to support the growth of economic activity.