After posting a slight decline in October, the manufacturing sector accelerated in November 2015 mainly on strong local demand, according to the National Economic and Development Authority (NEDA).
The Volume of Production Index (VoPI) grew 7.5% in November, reversing the 1.8% decline in October 2015, according to the Philippine Statistics Authority’s Monthly Integrated Survey of Selected Industries for November 2015. Also, the Value of Production Index (VaPI) increased 1% in the same month after posting declines since April 2015.
“The increased growth in manufacturing despite the continued weak global demand shows the resiliency of our domestic economy. This could also potentially support stronger fourth-quarter 2015 growth of the industry,” Economic Planning Secretary Arsenio Balisacan said in a statement.
He added that the sector is expected to post further growth through December 2015 on the back of robust domestic demand, increased inflow of remittances, stable inflation, and low fuel prices.
“We must aggressively pursue efforts to encourage innovation to help the manufacturing sector realize its potential as driver of economic growth. We have to explore and invest in new technology to enhance existing product base to maintain competitiveness in the regional and global market,” Balisacan, who is also NEDA director-general, added.
For consumer goods, tobacco maintained its robust growth in November 2015, posting a 52.7% and 54.1% growth rate in volume and value of production, respectively, despite the slowdown from its three-digit growth in the previous month.
But the food subsector continued to decline in both production volume and value, contracting 10% in volume and 9.8% in value. This is due to the plunge in production triggered by the low demand for tuna products, low supply of agar, and inadequate supply of raw materials for the production of vegetable and animal oils.
For intermediate goods, leather goods posted a double-digit growth of 23.7% and 24.9% in volume and value of production. For capital goods, basic metals grew 25.1% and 11.3%, the sector sustaining its robust growth in the previous month and offsetting its negative performance since May.
The transport sector also grew by 9.5% in volume and 8.7% in value due to the sustained strong sales in passenger and commercial vehicles.
Meanwhile, the average capacity utilization grew slightly to 83.6% in November 2015 from 83.5% year-over-year, with basic metals posting the highest utilization rate of 88.6%. Among surveyed firms, 25.4% are operating at full capacity (90%-100%), 55.8% at 70% to 89%, and 18.8% at below capacity (70%).
“We need to raise the productive capacity of MSMEs (micro, small and medium enterprises) by upgrading skills and improving access to financing, which will enhance their capacity to expand and participate in the global value chain,” the Cabinet official said.
The business sector is also expected to benefit from the realization of an ASEAN Economic Community, which is seen to accelerate investments, create additional employment, and generate more income for the Philippines.
“To fully benefit from the ASEAN economic integration, the government needs to improve the business climate by amending restrictive legislation and simplifying complicated business-related processes and regulations,” Balisacan said.
