Holidays, favorable conditions seen driving fourth quarter factory output: NEDA

November 5, 2019

The coming holiday season and strong macroeconomic conditions are seen to contribute to improved performance the manufacturing sector for the last quarter, the National Economic and Development Authority ( NEDA) said Tuesday.

Despite total manufacturing index recording negative growth in September  in the Philippine Statistics Authority’s Monthly Integrated Survey of Selected Industries (MISSI), NEDA said manufacturing subsectors have shown improvements.

Year-on-year Volume of Production Index (VoPI) and Value of Production Index (VaPI) declined by 3.0 and 2.3 percent, respectively. This is the ninth consecutive month in 2019 of decline in volume and value indices.

“Despite the slowdown in the overall performance of the manufacturing sector for September 2019, we have observed improvements in various subsectors which can be attributed to the upcoming holiday season alongside lower inflation, stable exchange rate, and lower interest rate,” said NEDA Officer-in-Charge (OIC) and Undersecretary for Regional Development Adoracion Navarro.

Navarro cited positive growth in beverages, tobacco products, basic metals, fabricated metal products, wood and wood products, machinery except electrical, chemical products, paper and paper products, printing, and rubber and plastic products.

Navarro said the government will need to push for high impact and implementable infrastructure projects under the Build, Build, Build program.  

She added  this will sustain the demand for construction-related manufactures as more infrastructure flagship projects reach the construction phase.

It will also contribute to more employment and higher disposable income, resulting in increased demand for consumer goods..

“We need to sustain infrastructure spending to achieve the national government’s target disbursement performance for the year. An extension in the validity of the 2019 budget, and the timely passage of the proposed 2020 national budget should be considered to avoid delays in the implementation of construction-related projects and activities,” Navarro said.

Citing the need to strengthen linkages between manufacturing and agriculture, Navarro said the government also needs to scale up efforts to improve Shared Service Facilities (SSFs).

This will help farmers consolidate and engage in higher value-adding activities, which can also contribute to growth in manufacturing.

Regulatory bottlenecks in the manufacturing sector will also have to be addressed, Navarro said.

“Turn-around periods for processing and issuing clearances, permits, and other required certifications have to be shortened. Continuous investments on ICT connectivity and innovation are also needed,” she added.

MISSI is a report that monitors the production, net sales, inventories, and capacity utilization of selected manufacturing establishments to provide flash indicators on the performance of the manufacturing sector. DMS