Moody’s sees further slip in factory output

MANILA, Philippines – A unit of Moody’s Corp. sees the expansion of the country’s factory output slipping further in October amid weak global demand while the prolonged and severe El Niño weather condition continued to pull down food production.

Moody’s Analytics believes the growth of Philippine industrial production eased to 3.2 percent in October from 3.5 percent in September due to the impact of the El Niño as well as the global economic slowdown.

“Food production has been under pressure from dry conditions associated with El Niño. Food is the major drag, as it is the largest component of the industrial production survey,” Moody’s Analytics said.

It added the country’s merchandise exports continued to slump, booking its steepest fall in September.

“Export-facing sectors including electronics have also been struggling on weakened global demand, especially stemming from China, Asia’s regional tech hub,” it said.

According to the monthly integrated survey of selected industries released by the Philippine Statistics Authority (PSA), the country’s manufacturing output slipped to 3.5 percent in September from 3.7 percent in August.

The increase in the volume of production index (VoPI) was attributed to the increment registered by seven major sectors.

Seven major sectors exhibited two-digit growth in VoPI led by tobacco products (35 percent), electrical machinery (21.4 percent), footwear and wearing apparel (13.5 percent), machinery except electrical (12.8 percent), textiles (12.6 percent), transport equipment (11.8 percent) and miscellaneous manufactures (11.1 percent).

On the other hand, value of production index (VaPI) for total manufacturing further shrank by 4.8 percent in September from 4.6 percent in August.

This was attributed to the decreases in VaPI observed in nine major sectors led by furniture and fixtures (-39.1 percent), wood and wood products (-30.1 percent), printing (-25.6 percent), petroleum products (-24.8 percent), basic metals (-18 percent), and food manufacturing (-17.9 percent).