MANILA – The manufacturing sector grew at a slower pace in January as demand dropped after the holiday season, the National Economic and Development Authority (NEDA) said.
The Volume of Production Index (VoPI) grew by only 3.3 percent in January from 4.4 percent in the same month last year, registering its slowest growth since April 2014.
The Value of Production Index (VaPI) also decreased by 1.8 percent in January from 3.3 percent in the same month last year, the steepest decline since May 2013.
“The overall production indices of the manufacturing sector is dragged down by lower food production due to post-holiday tempering of consumer demand and due to firms keeping their production at manageable levels during the start of the year,” said Socio Economic Planning Secretary Arsenio Balisacan.
“The sudden drop in food manufactures dragged the positive output of the majority of the manufacturing subsectors including printing, leather products, basic metals, beverages, and textiles which were listed as the highest performers in January 2015,” he added.
In intermediate goods, printing posted the highest growth of 206 percent driven by the demand for school materials owing to the implementation of the K-12 program.
Non-metallic products registered the rise in private construction.
Among capital goods, basic metals posted the highest growth of 51 percent in terms of volume, and 46 percent in terms of value with increased production of non-ferrous materials and the newly inaugurated steel mill in Davao City.
Transport equipment, meanwhile, posted its highest growth rate at 29 percent in terms of volume since December 2013 as output from car assemblers, parts makers, aircraft parts makers and shipbuilders increased significantly.
NEDA said growth of the Value of Net Sales Index (VaNSI) posted positive for January despite the lower prices reported this month compared to the same period in 2014.
The average capacity utilization in the manufacturing sector, on the other hand, decreased to 83 percent in January due to typical downturn in production at the beginning of the year.
However, NEDA expects the figure to rise with private construction activities this year.
Balisacan said that despite the low output growth, indicators point to higher growth of the manufacturing sector this year.
He added that the manufacturing sector needs to enhance its absorptive capacity, and constraints faced by the sector must be addressed for the sector to be able to meet growing demand.
He also stressed the need to fast-track infrastructure development to address logistical bottlenecks.
“Constraints remain on airport, cargo, road network and mass transport. Despite the positive effects of implemented decongestion efforts on ports, more needs to be done to accommodate stronger demand,” said Balisacan.