Manufacturing rebounds 4% in September 2018— PSA

MANILA, Philippines — The manufacturing sector grew both in terms of volume and value in September, reflecting strong demand and positive business outlook.

The Philippine Statistics Authority reported yesterday that factory output as measured by the Volume of Production Index, grew four percent in September, reversing the 5.7 percent contraction in the same month last year.

Double-digit growth rates were registered in the indices of textiles, petroleum products, machinery except electrical, miscellaneous manufactures, transport equipment and non-metallic products.

Likewise, the Value of Production Index for manufacturing rose 3.7 percent in September, a turnaround from the 6.2 percent decline in the same period last year.

Increases in the value of output were recorded in petroleum products, miscellaneous manufactures, machinery except electrical, transport equipment, electrical machinery, paper and paper products, and beverages.

Net sales of domestic manufacturers also rose both in terms of value and volume.

The Value of Net Sales Index registered an annual increment of 5.6 percent in September, reversing the 4.8 percent decline in the same month of 2017. Significant increases were seen in petroleum products, wood and wood products, paper and paper products, miscellaneous manufactures and tobacco products

The Volume of Net Sales Index in September, meanwhile, recorded an increase of six percent from a decline of 4.3 percent during the same month of the previous year. Four major industries contributed to growth: wood and wood products, paper and paper products, furniture and fixtures, and non-metallic metal products.

In September, factories operated at an average capacity rate of 84.2 percent with facilities for petroleum products operating at the highest capacity of 89.7 percent.

The National Economic and Development Authority (NEDA) said manufacturing growth in the remaining months of the year would be supported by strong domestic demand, an optimistic business outlook, and accelerated public investments infrastructure and social sectors.

Socioeconomic Planning Secretary Ernesto Pernia said the recent easing of limitations on foreign investment through the 11th Foreign Investment Negative List (FINL) could provide the manufacturing sector a boost by providing more training for workers and introduction of new technologies.   “We hope to sustain this growth momentum through the effectivity of the 11th RFINL, which allows increased foreign participation in certain areas and activities. This could help facilitate the expansion of production capacity in the manufacturing sector,” he said.

Under the 11th FINL, foreigners can now have 100 percent ownership of training centers for short-term and high level skills development. Such institutions can develop workers needed by industries.

“We hope that these specialized institutions can upgrade the industries’ knowledge in robotics, engineering design, and additive manufacturing, among others. This will scale up the local workforce as we get ready to align local manufacturing processes with the Fourth Industrial Revolution or Industry 4.0,” Pernia added.

Foreign participation of up to 40 percent in contracts for construction and repair of locally funded public works, meanwhile, will help improve public infrastructure projects that promote connectivity.

“Good infrastructure will support the smooth flow of raw materials and intermediate goods from production to processing areas, and link processing areas to markets,” said Pernia.