MANILA – The Philippine manufacturing sector sustained its growth in September 2015 on the back of robust demand and improvements in tobacco, transport equipment, and construction activity, according to the National Economic and Development Authority (NEDA).

In the Philippine Statistics Authority’s Monthly Integrated Survey of Selected Industries for September 2015, the manufacturing sector’s Volume of Production Index increased by 3.5 percent, nearly doubling its record of 1.9 percent in August 2015. But this is lower than the 4.7 percent growth it posted in the same month in 2014, and with its three-month moving average posting a 1.8 percent increase.

“We expect the manufacturing sector to further gain strength due to the holiday season and the approaching May 2016 elections. This makes business leaders anticipate increased orders and sales, which will boost both the production and sales of manufactured goods,” said Economic Planning Secretary Arsenio M. Balisacan.

“Also, with an improved pace of government spending, low production costs, declining oil prices and the steady inflow of remittances from overseas Filipino workers, this will form a favorable growth momentum of the manufacturing sector for 2016,” he added.

On the other hand, the Value of Production Index declined more slowly by 4.8 percent compared with 6.1 percent in August 2015. Thus, the decline of its three-month moving average slowed down at 5.9 percent from a 6.6 percent drop in August 2015.

For consumer goods, tobacco and beverages both turned in double-digit growth rates, with the former posting a 29.2-percent growth in volume and 30.4-percent growth in value of net sales. Beverages grew by 21.4 percent in volume and by and 32.2 percent in value of net sales. On the other hand, the food subsector continues to suffer in both value and volume of net sales due to the persisting dry spell brought about by the El Niño.

“We must strengthen the linkages of all production sectors through the implementation of the Comprehensive National Industrial Strategy that will guide the effective integration of the agriculture, industry and services sectors to ensure sustained growth and resiliency of the economy to external and internal shocks,” said Balisacan, who is also NEDA Director-General.

For intermediate goods, manufacture of leather products recovered from its decline in August 2015 posting a 16.3 and 17.6 percent growth in volume and value of net sales. Non-metallic mineral products continue to improve at 29.7 and 21.4 percent in volume and value of net sales due to the increase in the domestic demand for cement and other construction-related materials from both the private and public sector.

On the other hand, petroleum continued its slide, posting a 7.3- and 27.9-percent drop in value and volume of net sales due to lower supply of U.S. crude oil, rising tension in the Middle East and low global demand.

For capital goods, the growth of fabricated metal products nearly doubled its record last month, with 42.6- and 44.0-percent growth in volume and value of net sales, respectively. Transport equipment continues to benefit from the growth of the automotive and construction industry, growing by 11.8 percent in volume and 8.7-percent growth in production value.

“The government needs to enhance the productive capacity of Micro, Small, and Medium Enterprises (MSMEs) through capacity building and improved access to financing. It should also play an active role in facilitating the smooth flow of goods by addressing logistical bottle necks and reducing transportation costs,” said Balisacan, who is also NEDA Director-General.

Meanwhile, net sales of basic metals continue to decline, with 4.4 and 16.7 percent contractions in volume and value. This is attributed to the decrease in production and of non-ferrous metals and weak demand for iron and steel from China.

“To minimize the adverse effects of uncertainties in the global market, we need to boost domestic consumption to compensate for possible losses in exports,” Balisacan said.

“We also need to explore new segments of global value chains, products, and markets that will enable the domestic economy to maximize potential gains from the ASEAN economic integration and from the eventual recovery of the global market,” Balisacan added.

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