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Monday, October 23, 2017 | MANILA, PHILIPPINES
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   economic indicators

Date posted: Wednesday, April 12, 2017 | Manila, Philippines

BY Jochebed B. Gonzales, Christine S. Castañeda

February sees overseas sales of goods, factory output grow

MERCHANDISE exports and manufacturing stayed on a growth path in the second month of the year, the latest government data showed.

In a report, the Philippine Statistics Authority (PSA) yesterday said export receipts increased 11% to $4.782 billion in February from $4.310 billion a year ago.

This was the third straight month of growth for exports, but the latest figure was slower than the 24% year-on-year increase last January.

Year-to-date, exports have increased by 17.4% from last year, faster than a two percent full-year government target.

Accounting for half of outbound shipments last February, electronic exports increased 15.9% to $2.470 billion from $2.131 billion a year ago. The semiconductor subgroup, which comprised more than a third of total electronics exports, grew by 14.8% year on year.

“The healthy growth in Philippine exports was mainly driven by higher exports to East Asian countries, comprising 48.3% share in total exports,” Socioeconomic Planning Secretary Ernesto M. Pernia said in a statement.

The Philippines’ most robust markets in the region were Hong Kong and China, shipments to which grew by 66% and 24.7%, respectively.

Union Bank of the Philippines chief economist Ruben Carlo O. Asuncion ascribed the improvement in exports so far this year to “the slightly improving advanced economies.”

“Prospects for more opportunities to export inputs and finished products may have marginally improved and have been impacted by the cheaper peso since November 2016,” he added.

Sergio R. Ortiz-Luis, Jr., president of Philippine Exporters Confederation, Inc. agreed, saying: “Main reason of growth is the recovery of the markets: Europe, US, China and the ASEAN.”

“It looks like we will have a good year because the problems before are now solved and there are bigger orders coming from China and Japan.”

Despite the double-digit expansion of exports, the country’s balance of trade in goods remained in deficit at $1.728 billion in February, albeit narrower than the $2.469 billion the month before and the lowest since the $1.104 billion in February last year. Trade remained in deficit as merchandise imports increased by a nine-month-high 20.3% to $6.511 billion last February from $5.414 billion a year ago.

Comprising nearly a third of total imports, capital goods purchased from abroad increased 18% year-on-year.

Consumer goods, which comprised more than a sixth, went up by 21.5% year-on-year.

The biggest component at more than a third of the total import bill were raw materials and intermediate goods, which rose by 7.9% year-on-year.

Angelo B. Taningco, economist at Security Bank Corp., ascribed imports growth to “robust import demand by local firms amid vibrant investment spending,” while he said “peso depreciation... tends to promote exports.”

He added that the continuous growth of imports, which showed an uptrend since August last year, “may have been due to the increasing demand in construction and infrastructure development.”

Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines, said “strong consumer and investment spending as well as the recovery in oil prices boosted the country’s imports.”

He attributed growth of consumer goods imports to strong domestic demand and the increase of capital goods to “upbeat business conditions.”

In a separate report yesterday the PSA said manufacturing growth returned to double-digit territory last February.

In its Monthly Integrated Survey of Selected Industries (MISSI), the PSA reported that volume of production index (VoPI) grew by 10.7% year on year, accelerating from the 7.1% last January.

The latest figure was higher than the 8.7% estimate of Moody’s Analytics and confirmed the acceleration in the purchasing manager’s index that Nikkei-IHS Markit noted last month.

February’s VoPI turnout marks the 20th straight month since July 2015 that industrial output stayed in positive territory.

Capacity utilization, which is the extent by which industry resources are being used in the production of goods, averaged 83.7% for February, with 11 of the 20 major industries (55%) operating at 80% and above capacity utilization rates.

In a statement, Mr. Pernia, who is director-general of the National Economic and Development Authority (NEDA), attributed the growth in manufacturing output to “the upsurge in production of petroleum products, food, basic metals, and transport equipment.”

Landbank’s Mr. Dumalagan agreed, saying: “Factory output increased in February 2017 for the same reasons that caused a jump in the country’s imports.”

“Upbeat consumer and investment spending fuelled categories including food manufacturing, transport equipment, and machinery,” he noted.

“The recovery in oil prices also boosted the production of petroleum products.”

Security Bank’s Mr. Taningco said the latest manufacturing numbers reflect “positive business sentiment and strong capital formation activity.”

According to the MISSI report, 14 major sectors contributed to the growth in VoPI, with double digit increases posted by petroleum products (47.1%), basic metals (28.2%), transport equipment (27.8%), non-metallic mineral products (26.3%), furniture and fixtures (21.9%), food manufacturing (20.6%), wood and wood products (19.5%), chemical products (14.5%), and leather products (12.5%).

NEDA’s Mr. Pernia said the growth in the production of wood and wood products and non-metallic mineral products is “a positive response to the government’s and private sector’s continuous efforts to ramp up infrastructure, as well as the increasing demand for housing from our expanding middle-class population.”

Going forward, the “[o]utlook for VoPI is positive and it is expected to continue to grow as demand increases and as economic activity increases,” Unionbank’s Mr. Asuncion said.

Growth in factory production averaged 14.3% last year.

“We must double our efforts to strengthen the manufacturing sector and help it realize its full potential,” Mr. Pernia said.

“The sector is expected to benefit from an investment-led growth supported by stable inflation, increased spending on infrastructure and rural development, strong private consumption and continued gains in overseas remittances.”

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