Factory output rises 13.5% in August

MANILA, Philippines – Manufacturing activity grew 13.5 percent in August on increased production of capital and consumer goods, as well as export-oriented goods, the National Economic and Development Authority (NEDA) said yesterday.

Factory output, as measured by the Volume of Production Index (VoPI), posted significant improvement from an expansion of 2.2 percent in August 2015.

Increases in production were registered in the following sectors: machinery except electrical, basic metals, rubber and plastic products, transport equipment, beverages, wood and wood products, tobacco products, food manufacturing as well as footwear and wearing apparel.

NEDA said growth in the VoPI for August was higher than the three-month moving average of 11.8 percent, signalling expansion and recovery of the manufacturing sector from a weak performance last year.

In terms of value, the manufacturing sector registered growth of 8.4 percent during the reference period, reversing the 5.8 percent contraction in the Value of Production index (VaPI) in August 2015. Growth in value was seen in the following sectors: transport equipment, rubber and plastic products, basic metals, beverages, machinery except electrical, food manufacturing, tobacco products, and wood and wood products.

For consumer goods, the food subsector recorded a double-digit growth in August, posting 11.1 percent and 13.3 percent growth rate in volume and value of production, respectively. These are vast improvements from the 14.5 and 14.8 percent decline last year.

The beverage subsector recorded 16.1 percent and 21.3 percent growth in the volume and value of production, respectively. These are also a reversal from 7.5 and 0.7 percent contractions last year.

For intermediate goods, the petroleum products subsector recorded a 2.3 percent and negative 6.8 percent growth in volume and value of production, likewise turning around from last year.

In August, factories operated at an average utilization rate of 83.6 percent. The basic metals industry registered the highest capacity utilization rate of 88.4 percent.

“Manufacturing output sustaining positive growth despite the weak global economy is driven by the increase in new orders and sales volume as well as expansions of new manufacturing firms,” said NEDA officer-in-charge and deputy director-general Rosemarie Edillon.

Firms, she said, are expected to remain in expansion mode due to increase in operating capacity and purchasing activities.

Edillon said growth in the manufacturing sector can be sustained if support programs in low-income and low-productivity areas can be implemented

Increased investments in research and development activities must be prioritized, she said, to enhance the productivity and competitiveness of local products and processes, especially from micro, small and medium enterprises.

“What is important is that industries are able to produce quality goods and services at affordable prices,” said Edillon.