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Manufacturing growth eased to 4.8% in December, says PSA

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Manufacturing growth slowed to 4.8 percent in December from the previous months amid higher inflation and softer demand for technology products, data from the Philippine Statistics Authority show.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the slower manufacturing growth in December was due to “the higher number of holidays that somewhat slowed down manufacturing/production activities during the month; as well as higher prices/inflation, higher interest rates, risk of US recession that are drags on manufacturing and investment activities.”

Results of the PSA’s monthly integrated survey of selected industries showed that the volume of production index for manufacturing recorded a year-on-year increase of 4.8 percent in December, slower than the annual increase of 5.9 percent in November and 19.2 percent a year earlier.

The PSA said the biggest contributors to the slowdown were transport equipment; computer, electronic and optical products; and basic metals.

Ricafort said the slower growth may have to do with the normalization of the base/denominator effects of a much higher base a year ago and the strong growth levels seen in earlier months.

“Nonetheless, the modest, single-digit growth in the manufacturing volume production continued to pick up as the economy further reopened towards greater normalcy, with no large lockdowns so far in 2022 and no lockdowns going forward as a priority of the administration,” Ricafort said.

Data showed that eight industry divisions registered higher annual growth rates in December, including the manufacture of food products.

Aris Dacanay, the economist for ASEAN of Hongkong and Shanghai Banking Corp., said in an emailed response to Manila Standard that the softer numbers in manufacturing reflected the fall in electronics exports growth.

“We expect numbers to remain soft over the first quarter of 2023 amidst today’s global tech slow down and overall demand softening as the wave of rate hikes last year feed through [the] global economy,” Dacanay said.

Dacanay said, however, the faster and earlier-than-expected reopening of mainland China “should put a floor on global trade and add to the resilience of ASEAN as a region.”

Meanwhile, the value of production index rose 10.1 percent in December, although slower than the November annual growth of 12.5 percent.

The PSA said the slower year-on-year growth of VaPI was brought about by the slower annual increase in the index of manufacture of transport equipment.

Meanwhile, the average capacity utilization rate eased to 71.6 percent in December from 72.6 percent in November.

The PSA said that in the whole 2022, the annual average growth of VoPI was 15.2 percent, slower than 52.6 percent in 2021. The growth of the value of production index also decelerated to 22.5 percent from 49.2 percent.

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