MANILA – The manufacturing sector grew at a slow pace in January 2015 following the decline of demand after the holiday season, according to the National Economic and Development Authority (NEDA).

Registering its slowest growth since April 2014, the Volume of Production Index (VoPI) grew by 3.3 percent year-on-year in January 2015 from 4.4 percent in the same month in 2014. Also, the steepest decline since May 2013 was recorded by the Value of Production Index (VaPI) that decreased by 1.8 percent in January 2015 from 3.3 percent in the same month last year. The figures are based on the Philippine Statistics Authority’s Monthly Integrated Survey of Selected Industries (MISSI).

“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 Economic Planning Secretary Arsenio M. 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,” Balisacan added.

Among intermediate goods, printing posted the highest, three-digit growth (206.4% in terms of both volume and value) with the increase in the demand for school materials owing to the implementation of the K-12 program, Likewise, non-metallic products registered the rise in private construction.

Among capital goods, basic metals posted the highest growth (50.8% in terms of volume, 45.7% in terms of value) with increased production of non-ferrous materials and the newly inaugurated steel mill in Davao City. Transport equipment likewise posted its highest growth rate (29.3% in terms of volume) since December 2013 as output from car assemblers, parts makers, aircraft parts makers and shipbuilders increased significantly.

Year-on-year growth of the Value of Net Sales Index (VaNSI) posted positive for January 2015, despite the lower prices reported this month relative to the previous year.

On the other hand, the average capacity utilization in the manufacturing sector decreased to 83.2 percent in January due to typical downturn in production at the beginning of the year, but is expected to rise with private construction activities this year. Among surveyed manufacturing firms, 23.1 percent of the establishments operated at full capacity (90%-100%). About 59.7 percent operated at 70 percent -89 percent capacity, while 17.2 percent of establishments operated below 70 percent capacity.

Despite the low output growth, Balisacan said that indicators point to higher growth of the sector in 2015.

The manufacturing sector, however, 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, the Cabinet official said.

He underscored 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, who is also NEDA Director-General.

He added that power also needs to be managed well to meet higher demand from the manufacturing sector, particularly those involved in manufacturing of textiles, plastics, non-metallic mineral products and some electronic products.

“Short-run measures are now being carefully weighed in the legislative branch. The completion of committed power projects will ease concern in the medium term. Long-run energy security measures should, as well, be in place, such as encouraging more investments in a mix of energy sources, among others,” said Balisacan.

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