Factory output rose for the third consecutive month in March, posting the fastest growth in 12 months, the National Statistics Office (NSO) reported yesterday.
NSO’s Monthly Integrated Survey of Selected Industries (MISSI) showed that factory production, as measured by the volume of production index, increased by an annual 8.2% in March.
March’s gain was better than the revised 6.5% growth seen in February, but still slower than the 10.1% recorded the same month a year ago.
The government said this indicated expansion in economic activity in the first quarter. Ruperto P. Majuca, assistant director-general at the National Economic and Development Authority, said in an e-mail: “The growth can be attributed to both strong domestic and foreign demand.”
Of the 20 major sectors, furniture and fixtures led gainers, with the sector’s output climbing by an annual 95.1%, although slower than the previous month’s 170.3% growth.
Other sectors posting double-digit increments were footwear and wearing apparel (94.6%), tobacco products (28.4%), publishing and printing (17.3%), wood and wood products (13.7%), and beverages (11.3%).
Electrical machinery, food, and petroleum products likewise gained in March. Electrical machinery raised production by 28.0%, faster than the 1.7% recorded a month ago. Food and petroleum products posted growth rates of 16.1% and 2.0% respectively, though slower than February’s 12.9% and 3.1%.
The index that measures production in terms of value, meanwhile, gained 11.0%, higher than the revised 9.5% in February.
Donald G. Dee, Philippine Chamber of Commerce and Industry vice-chairman and treasurer said: “Manufacturing firms are recovering their [pre-crisis] inventory levels. This is a sign that there is recovery in factory production, but it is soft given the slump in exports in the same month.”
“Month-on-month, we expect fluctuations [in production growth figures], as the strength of exports recovery is not strong.”
Still, the 10% export growth target this year should be achievable, Mr. Dee said.
Economist Benjamin E. Diokno of the University of the Philippines agreed that the faster growth in factory output could be due to the replacement of depleted inventories.
“It could also be subject to revision since a big chunk of large manufacturers did not respond to the survey,” citing the 78.7% response rate for the month’s MISSI.
Mr. Diokno expects manufacturing output to grow modestly, the same pace as the economy which he said would grow by about 4-5% this year.
Federation of Philippine Industries Chairman Jesus L. Arranza said the improvement in factory production was good for the economy, since “any increase in capacity utilization will definitely [lead to] lower prices of the finished products and create more employment.”
On the average, factories used 83.6% of their capacity in March, NSO reported further. About a fifth of the total number of establishments surveyed operated at full capacity.
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By Carmina Angelica C. Valeroso
Source: BusinessWorld, May 16, 2012
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