Factory output likely fell further in November — Moody’s Analytics
VOLUME of factory output, as measured by the government’s Monthly Integrated Survey of Selected Industries (MISSI), likely decreased annually for a second straight month and by a bigger degree in November last year, Moody’s Analytics said in its Asia Pacific Economic Preview e-mailed to journalists on Friday, even as it clarified that the drop was due largely to a high base in 2016.
The comment comes amid assessment by IHS Markit for Nikkei, Inc. that improvement of Philippine manufacturers’ operating conditions bested those of peers in Southeast Asia in 2016’s last three months.
“We expect industrial production fell seven percent y/y in November after a 6.6% drop in the prior month,” Moody’s Analytics said, noting that “[i]ndustrial production growth has been in a downturn since the start of 2017.”
“Much of that reflects the high base from a year earlier, when activity was ramping up during the presidential election year.”
Moody’s Analytics’ projection also compares to a 15.1% surge recorded in November last year.
In its own assessment, IHS Markit said the seasonally adjusted Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI) picked up to 54.8 in November from October’s 53.7, signaling “further improvement in business conditions” amid production expansion and new orders.
A PMI reading above 50 suggests improvement in business conditions compared to the previous month, while a score below that signals deterioration.
November’s reading, IHS Markit had said in its Dec. 2 report, was “the highest” for the year.
December, IHS Markit said in a Jan. 2 report, saw the Philippines’ PMI slip to 54.2 that nevertheless reflected “solid increase” from November and topped Southeast Asia’s 49.9 average for the same month. While Philippine output and new orders both grew at slower rates in December compared to November, growth remained marked and above 2017 averages, IHS Markit had noted, adding that “[d]omestic demand stood out as a key driver for manufacturing activity as export growth remained subdued.”
In its note yesterday, Moody’s Analytics said base effects that have been weighing on MISSI data “will fade in 2018”.
“Meanwhile, we expect firm external demand and strong investment to support a moderate recovery of industrial production this year,” Moody’s Analytics said.
“Infrastructure development is likely to ramp up thanks to President Rodrigo (R.) Duterte’s infrastructure development program, and that should help the production of key inputs such as cement.”
