The manufacturing sector continued to grow in December 2015 as construction activity picks up and oil prices still drop, according to the National Economic and Development Authority (NEDA).

In the Philippine Statistics Authority’s Monthly Integrated Survey of Selected Industries for December 2015, the Volume of Production Index (VoPI) grew by 4.9 percent, a steady push from its growth of 4.4 percent in the previous month, while the Value of Production (VaPI) decreased by 2.6 percent.

“We must continue to help the manufacturing sector realize its potential by creating and strengthening linkages across all production sectors. This will enhance its capacity to absorb labor,” said Socioeconomic Planning Secretary Emmanuel F. Esguerra.

For consumer goods, beverages leaped from its negative performance in the previous month to 12.0 percent growth in volume of production and 15.2-percent growth in value of production—tripling its performance from November 2015.

On the other hand, the drop in the food subsector slowed down in both production volume and value, registering a contraction of 1.3 and 2.7 percent, respectively. This is due to the persistent dry spell brought about by El Niño in the second semester of 2015.

“It is important to broaden the scope of supply and marketing linkages to dampen the impact of the El Niño which is reported to last until the second quarter of 2016. This includes encouraging more processing and better storage, packaging, and marketing of agricultural products to expand product range and reach a wider market,” the NEDA official said.

He added that the government must continue to improve infrastructure to support business activity and encourage businesses to reap the benefits of free trade agreements through aggressive information-sharing schemes and simplified bureaucratic processes.

“Smooth flow of goods can be achieved through adequate and resilient road networks, seaports and airports, and reliable telecommunication services. These improvements will enhance the capacity of local players to participate in global value chains,” said Esguerra.

For intermediate goods, non-metallic mineral products led a double-digit boom by 18.8 and 18.2 percent in volume and value of production, while paper and paper products came in second posting 18.6 and 18.8 percent growth in volume and production.

However, petroleum continued to decline, posting a drop of 33.8 and 40.6 percent in volume and value of production due to the weak global demand and oversupply in the world market.

For capital goods, machinery, except electrical machinery, posted a double-digit growth of 17.8 and 22.2 percent in volume and value of production. The transport sector also grew at a rapid pace of 13.0 and 9.9 percent in volume and value of production following the attractive financing schemes for automotive sales.

Meanwhile, the average capacity utilization of firms maintained its growth at 83.5 percent, with basic metals posting the highest utilization rate of 88.5 percent. .

“Despite the unfavorable economic global climate, the sector remains optimistic in 2016. With low and stable inflation and good employment opportunities, consumers have increased spending power, which strengthens domestic demand. The continued drop in petroleum prices will also keep operating costs minimal, and this is expected to boost the volume of production,” said Esguerra, who is also NEDA Director-General.

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