Factory activity rebounds in August

MANILA, Philippines — Manufacturing activities picked up pace in August following a contraction in July mainly due to the increased production of construction-related materials, the Philippine Statistics Authority (PSA) said.

In its latest Volume of Production Index (VoPI) survey, the PSA – an attached agency of the National Economic and Development Authority (NEDA) – said factory output rose 2.8 percent in August, reversing the 3.5 percent decline in July.

The Value of Production Index (VaPI) likewise went up 2.4 percent in August from a two percent contraction the previous month.

Both VoPI and VaPI in August, however, were significantly lower than their previous levels a year ago.

PSA said 10 out of 12 major sectors covered by the index registered double-digit expansion, most significant of which is the 89.5 percent growth in the production of fabricated metal products, most of which are used for construction. The other sectors are: printing, furniture and fixtures, basic metals, food manufacturing, leather products, non-metallic mineral products, transport equipment, electrical machinery, and paper and paper products.

NEDA Undersecretary Rolando Tungpalan said manufacturing would likely sustain its growth in the fourth quarter of the year, supported by the growth in the production of construction products.

“Sustained infrastructure development, translating to an increase in public construction expenditure, is anticipated not only to increase the growth of the manufacturing sector but also to support the continuous growth of the economy,” he said. “The local production capacity and efficiency of construction-related manufacturers must be expanded to support our initiative of massive spending in infrastructure programs and projects.”

Growth in export-oriented products also contributed to the recovery of the manufacturing sector as the production in furniture and fixtures, as well as leather products, remained positive.

Despite the optimistic outlook for factory activity, however, internal and external risks to the sector remain. These include short-term upward inflationary pressures stemming from higher global oil prices, price increases in fish, corn, vegetables, flour and other cereal products.

“Typhoon occurrences may also interrupt business activities, resulting in lower manufacturing output,” said Tungpalan.