Thursday, 27 May 2010

Factories sustain double-digit output growth

BusinessWorld
http://www.bworld.com.ph/main/content.php?id=11619

DOUBLE-DIGIT growth was sustained by the manufacturing sector for the fifth consecutive month in March, the government yesterday said.

Factory output, as measured by the volume of production index (VoPI), rose by 23.1% in March from a year ago, a reversal from last year’s 15.3% slump, the National Statistics Office (NSO) said.

March’s gain, however, was slower than February’s 32.5%, marking the third straight month of a slowdown in output growth. Industry experts, however, were optimistic that the uptick would not fizzle out.

"Basically, it shows a very good indication of a broad-based recovery and it supports the strong exports recovery, especially the electronic products as well as petroleum and basic metals," University of Asia and the Pacific economist Victor A. Abola said in an interview.

"The growth is still positive and not necessarily a bad sign, and even if March’s growth was slower, it was only a base effect since the economy in 2009 was doing badly," added Felipe M. Medalla, Socioeconomic Planning secretary during the Estrada administration.

"In some ways, the manufacturing sector is doing well, since some companies are increasing their production activities because of global recovery and our exports industry," Philippine Chamber of Commerce and Industry Chairman Emeritus Miguel B. Varela said.

University of Asia and the Pacific economist Peter Lee U said, "the double-digit growth is due to the recovery of the global economy, although the growth in electrical machinery and petroleum helped the sector."

Of the 20 major sectors covered by the monthly survey, petroleum products led gainers with output climbing by an annual 84.2%, though slower than the previous month’s 154.6% growth.

"Both refineries of Shell [Philippines LLC] and Petron [Corp.] are operating this year which explains the significant increase," said Zenaida Y. Monsada, director at the Department of Energy’s oil industry management bureau.

"Last year, Shell and Petron shut down their refineries, although not completely, since there was still little production," she added.

Index heavyweight electrical machinery upped production by 38%, while food production rose by a meager 0.6%, easing from February’s 1.2%.

"I think consumer consumption is steady, however, some might have a change in priorities given it was elections, but it will probably boosts now since elections is over," Mr. Varela said.

Other sectors posting double-digit increments were miscellaneous manufactures (57.3%), basic metals (50.6%), transport equipment (47.7%), furniture and fixtures (39.6%), wood (39.6%), leather (37.5%), machinery except electrical (34.5%), rubber and plastic products (26.0%), fabricated metal products (20.7%) and beverages (16.2%).

Manufacturers of footwear and wearing apparel slashed production by 24.7% in March. Tobacco output tumbled by 34.6%, reversing the 18.5% gain posted a month earlier.

The volume of net sales, a measure of demand, rose at a slower pace of 21.7% in March compared to January’s 29.2%.

Of the 470 establishments covered by the survey, only 12.9% reported having operated at full capacity.

Mr. U noted that the output trend for the manufacturing sector was still upward.

"I think the manufacturing sector would continue to post double-digit growth, not as strong as 30%, but most probably in the mid-20%, as long as the issues in the euro zone won’t affect it," he said.

Mr. Abola also shared the same view, saying: "I think we should continue to see a double-digit growth in the second quarter and in the early part of the third quarter."

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