Imports, factory output on a skid

Output of local factories had flattened out in May compared to a year ago after a 2.2 percent growth the previous month reflecting a slowdown in the industrial sector which bodes ill for economic prospects for the year.

The volume of production index (VoPI) grew a negligible 0.9 percent in May that a National Statistics Office (NSO) report attributed to low output from manufacturers of paper and paper products and non-metallic mineral products.

The NSO also reported imports grew at their slowest rate in one and a half years in May, largely due to a steep decline in oil and cereal purchases.

The report noted six of 11 major sectors reported two-digit increases in production output, including furniture and fixtures, beverages, miscellaneous manufactures, chemical products, rubber and plastic products and publishing and printing.

Compared with the previous month, however, the May figures improved by 4.3 percent against a 4.5 percent decline in the previous month.

This was due to an expansion in output in furniture and fixtures, tobacco products, petroleum products, beverages and paper and paper products.

Total imports for the month rose 1.6 percent to $4.89 billion compared to a year earlier, the NSO said in a statement.

It was their slowest year-on-year advance since imports started rising in November 2009 from the slump caused by the global economic crisis, according to National Statistics Office data.

May imports were also down 11.1 percent from the previous month.

Analyst Alvin Arogo of DBP-Daiwa Securities said the weak figures did not necessarily augur well for the Philippine trade balance.

“There’s a possibility the trade deficit will worsen. I don’t expect a significant improvement (in exports), meaning the deficit won’t probably shrink,” Arogo told Dow Jones Newswires.

Raw materials and intermediate goods, which are processed or assembled in the Philippines to be sold abroad, accounted for 47.3 percent of all May imports, according to the government data.

Imports of oil products, the second-largest group, plunged 33.5 percent to $686 million.

Cereal product imports dropped 18.8 percent to $190 million, while transport equipment imports slipped 10.8 percent to $217 million.

Meanwhile, manufacturing output, adjusted for inflation, grew just 0.9 percent in May from a year earlier, the government agency said. –Daily Tribune