JOBS shed by the manufacturing and construction industries will likely temper fourth quarter economic activity, to bring the full-year growth estimate to 5-6%, offsetting gains from a pickup in business activity, First Metro Investment Corp. and University of Asia and the Pacific said in a joint report on Monday.

“We remain sanguine over the growth prospects for Q4-2021, as more firms have reopened, and consumers headed back to malls and restaurants,” the institutions said.

“We should end with a full year 2021 gross domestic product (GDP) growth of 5%-6%, and improving further in 2022, due to heavy election spending.”

The government recently raised its GDP projection for 2021 to 5.5% after the economy grew faster than expected in the third quarter even with lockdowns imposed to contain the coronavirus disease 2019 (COVID-19) outbreaks.

According to the report, the manufacturing sector appears to have led economic activity in the fourth quarter, as employment levels improved.

“However, we caution against over-optimism on account of the job losses in construction and manufacturing industries, tepid employment gains in the services sector in October, as well as uninspiring export expansion.”

The institutions are mostly optimistic, noting the expansion in manufacturing.

The Philippine Manufacturing Purchasing Managers’ Index, which measures factory activity, rose to 51.8 last month from 51.7 in November, the highest since the 52.2 reading in March.

The report’s authors also said that the inflation rate in December will likely fall below 4% with the decline in oil prices.

This aligns with Bangko Sentral ng Pilipinas projections, which noted headline inflation likely ranged between 3.5% to 4.3% in December.

However, the institutions noted that the employment situation is mixed, with construction jobs falling 7% and manufacturing jobs slipping 1.2% month on month in October.

Services jobs in transportation, insurance, retail, and public administration also fell.

“While employment rose in October, other facets of the labor situation paint a more mixed picture,” the institutions said.

“But we expect good prints for November and December, with increased economic activity, and Q1-2022 with national and local elections in sight.” — Jenina P. Ibañez