Factory output declined 1.2 percent in May from a year ago, ending 11 months of growth, on high inventories of several products, data from the Philippine Statistics Authority show.
Results of PSA’s monthly integrated survey of selected industries showed the volume of production index dropped 1.2 percent, following an 11.8-percent increase in April. The value of production index also tumbled 4.9 percent in May.
The negative growth performance of the manufacturing sector in May ended 11 months of positive growth, or since the 1.7-percent decline in June 2015, according to the National Economic and Development Authority.
“This drop in manufacturing production is the first for 2016. As business sentiment remains optimistic and supported by stable consumer confidence, industrial output is expected to improve towards the end of the second quarter,” said Economic Planning Secretary and Neda director-general Ernesto Pernia.
Pernia said the manufacturing sector was expected to benefit from the economic agenda of the current administration, particularly on increasing competitiveness, easing business processes, accelerating infrastructure spending and attracting foreign direct investment.
High levels of inventories in leather goods, drugs and medicines posted at the beginning of the year continued to meet the demand for these products, resulting in a production slowdown.
The volume and value of production in petroleum continued to decline, but at a slower pace due to higher demand for diesel from Europe and lower supply of oil from the US.
Pernia said the subdued global economic prospects, weaker-than-expected economic performance of major trading partners and weather shocks such as La Niña and typhoons remained risks to the manufacturing sector’s growth.
“The provision of adequate, sustainable and reliable infrastructure must be accelerated, and the capacity of MSMEs [micro, small and medium enterprises] must be further enhanced by strengthened linkages with large corporations and through knowledge and technology transfer,” he said.
“Public and private investments in research and development activities must be encouraged. Engagement in high technology endeavors, as well as attracting foreign direct investments, will be influential to paving the way for the much needed blossoming of high-tech manufacturing sub-sectors in the country,” Pernia said.
