The manufacturing sector likely expanded in February but slower compared with the double-digit growth a month ago, Moody’s Analytics, a division of Moody’s Corp., said in a report over the weekend.
“Philippine industrial production likely expanded 5.5 percent in February, following January’s astronomical 34-percent gain,” Moody’s said, adding the sector’s growth trajectory would augur well for the economy in general.
“The Philippines is set to have one of the best performing economies in the region again in 2016. Food production is expected to grow strongly in the coming months, as the negative effects a severe El Niño had on crop production start to dissipate,” Moody’s said.
Experts believe the manufacturing sector will remain one of the growth drivers of the economy. The dissipating effects of El Niño, especially on the agricultural sector, is seen positive for the industry.
The National Economic and Development Authority earlier said growth in the manufacturing sector started strong in 2016 as production of chemical products and food manufactures expanded in January.
The volume of production index under the Philippine Statistics Authority’s Monthly Integrated Survey of Selected Industries for January 2016 grew 34 percent in January, nearly seven times more than the growth rate of 5 percent in December 2015.
The value of production index recovered from a consistent decline since April 2015 after posting a 26.5-percent growth.
Economic Planning Secretary Emmanuel Esguerra said the sector was expected to grow more strongly for the year ahead following a moderate expansion in 2015 on account of weak global demand and adverse weather conditions.
He said a bullish business outlook was anticipated in the second quarter of 2016 on the back of higher election-related spending activities and the roll-out of infrastructure projects.
He said the implementation of projects under the public-private partnership program and stronger domestic demand during the dry season would further support the growth in the manufacturing sector.
Food manufactures posted a double-digit growth of 20 percent in January in terms of volume and 19 percent in value of production after a year of decline. Tobacco maintained its strength, growing in volume and value of production by 49 and 50 percent, respectively.
Chemical products posted triple-digit growth in both volume (312 percent) and value (310 percent) of production.
However, petroleum contracted by 35 and 34 percent in volume and value of production due to the decline in global demand and the ample supply of diesel in the Asian market.
The average capacity utilization remained at 84 percent for the fourth consecutive month, with basic metals posting the highest utilization rate of 88 percent. Among companies, 25.9 percent operated at full capacity (90 percent to 100 percent), 56 percent at 70 percent to 89 percent of capacity and 18 percent operated at below 70 percent.