FACTORY output rose to an eight-year high in April as the weakening of the peso and the increase in consumer demand encouraged manufacturers to produce more, the National Economic and Development Authority (Neda) said on Tuesday.
Data released by the Philippine Statistics Authority (PSA) indicated that the manufacturing sector’s Volume of Production Index (VoPI) grew 31.1 percent in April, 0.1 percent higher than the rate recorded a year ago. The last time the sector’s expansion breached 31 percent was in April 2010, which was an election year.
Analysts said the weakening of the peso will boost consumption spending as it would improve the purchasing power of the families of overseas Filipino workers. It also bodes well for exporters as it would allow them to earn more.
The peso has been weakening against the US dollar in the past few months. First Metro Investment Corp.-University of Asia and the Pacific Corporate Market Research expect the trend to continue in June and July to P52.67 and P53.05 to the dollar, respectively.
Neda Officer in Charge (OIC) and Undersecretary Jose Miguel R. de la Rosa said this can also be attributed to the passage of the Ease of Doing Business Act of 2018.
“A bullish business outlook is expected for the entire second quarter on the back of robust economic growth. An expansion of businesses will also be facilitated, thanks to the new law on ease of doing business,” de la Rosa said.
The Neda said the growth in production of food and export-oriented products, such as processed food, chemicals, fabricated metals, leather, petroleum, nonmetallic minerals, electrical and nonelectrical machinery, among others, contributed to the higher VoPI.
Higher government spending on infrastructure in the months leading to April helped sustain growth in construction-related manufactures, according to the Neda.
It added that construction-related manufactures continued its upward trend given higher demand for nonmetallic mineral products, particularly cement.
De la Rosa said the Ease of Doing Business and Efficient Government Service Delivery Law will boost factory output moving forward since it will help streamline procedures.
The law can also shorten processing time for government transactions, and create a central business portal to receive and obtain data involving business-related transactions.
“The full implementation of the Ease of Doing Business Act of 2018, and engagement in massive and coordinated capacity-building initiatives will help the manufacturing sector grow further,” de la Rosa added.
Based on the preliminary results of the Monthly Integrated Survey of Selected Industries, the PSA said the country’s average capacity utilization rate increased to 84.3 percent in April.
Data showed that 60 percent, or 12 out of the 20 major industries, operated at 80 percent and above capacity utilization rates.
The PSA said the proportion of establishments that operated at full capacity (90 percent to 100 percent) was recorded at more than one-fourth of the total number of establishments (28.3 percent) in April 2018.
More than half, or 53.3 percent of the total establishments, operated at 70 percent to 89 percent capacity while almost one-fifth of the total establishments (18.4 percent) operated below 70-percent capacity.