Factory output soared 34 percent in January from a year ago, on higher food and chemical production, signaling a good start for the economy in the first quarter, data from the Philippine Statistics Authority showed Thursday.
PSA said in its monthly integrated survey of selected industries the growth in the volume of production index accelerated from 4.9 percent in December 2015 and 2.6 percent in January 2015.
The National Economic and Development Authority said the growth in the manufacturing sector started strong in 2016, as production of chemical products jumped 312 percent year-on-year, while food output climbed 20 percent.
“The manufacturing sector is expected to grow more strongly for the year ahead following moderate growth in 2015, on account of weak global demand and adverse weather conditions,” said Economic Planning Secretary and Neda director-general Emmanuel Esguerra.
The value of production index also recovered from last year’s decline to post a robust growth of 26.5 percent in January.
Standard Chartered Bank economist Jeff Ng said the growth in factory output showed the domestic demand was stronger compared to the external demand. Strong domestic demand enabled the country’s gross domestic product to grow 5.8 percent in 2015, below the government’s target of 7 percent to 8 percent.
“This shows that domestic demand remains stronger compared to external demand. We still see a two-speed economy with domestic economic activities likely to cushion against external volatility,” Ng said in an e-mailed statement.
Esguerra said he remained bullish for the second quarter, on higher election-related spending and the roll-out of infrastructure projects.
“Continued implementation of projects under the public-private partnership and stronger domestic demand during the summer season will further support the growth in manufacturing sector,” said Esguerra.
Food manufactures posted a double-digit growth of 20.2 in terms of volume and 19.1 percent in value of production, after a year of decline. Tobacco maintained its strength, growing in volume and value of production by 49.4 percent and 49.6 percent, respectively.
Petroleum continued to wane as it contracted 35.1 percent in terms of volume and 33.7 percent in terms of sale, due to the continuing decline in global demand and the ample supply of diesel in the Asian market.
“The continued decline in oil prices is a double-edged sword that may increase our local production but may spell displacement of some of our overseas Filipino workers which in turn could affect the inflow of remittances,” Esguerra said.
The average capacity utilization remained at 83.5 percent for the fourth consecutive month, with basic metals posting the highest utilization rate at 88.4 percent.
Among companies, 25.9 percent operated at full capacity (90 percent to 100 percent).
Esguerra said the government should remain vigilant as risks to growth remained.
“We must continuously push for innovation. The country must be able to develop new products, especially those with linkages to agriculture and aquaculture, which will create opportunities for the greater number of our population to partake in the benefits of growth,” said Esguerra.
