By Lourdes O. Pilar, Researcher
REVENUE across all industries grew in the second quarter, albeit at a slower pace compared to a year ago, the Philippine Statistics Authority (PSA) reported yesterday.
Data from the PSA’s Quarterly Economic Indices (QEI) report showed total gross revenue index, which measures sales generated by companies, expanding by 6.5% in the three months to June.
The second-quarter QEI report marked the second time it used 2016 as the base year. In previous iterations of the report, it used 1978 as the base year.
The second-quarter reading was slower than the 8.3% posted in the first quarter and 9.6% in the second quarter of 2018.
Expansion was observed across all industries during the period with financial and insurance activities leading the way at 12.6% growth in the second quarter, slower than the 14.5% growth in 2018’s comparable three months.
Other sectors showing slower revenue growth were transportation, storage and communication (5.8% from 11.3%); mining and quarrying (4.2% from 10.2%); and manufacturing (2.4% from 10%).
Meanwhile, revenue growth accelerated in trade (12.5% from 8.3%); electricity, gas and water supply (10.1% from 8.9%); real estate (9.1% from 7.1%); and other services (6.2% from 5%).
Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc. (UnionBank), attributed the second-quarter result to the “slowdown in [the] aggregate income of the economy.”
“A glaring growth slowdown came from government consumption due to the stalled passage of the 2019 national budget. Government spending impact was largely lower in the first half of 2019 compared to the same period in 2018. Private consumption maintained growth for both first semesters of 2018 and 2019, but this instead resulted in very weak capital formation, affecting direct fixed and critical investments in the local economy,” Mr. Asuncion said in an e-mail.
Philippine gross domestic product (GDP) grew by 5.5% in the second quarter, which is the slowest pace in 17 quarters or since the 5.1% growth in the first quarter of 2015 based on PSA’s national accounts. Government spending growth figured in at 6.9%, decelerating from 7.4% the previous quarter and 11.9% last year.
Analysts blamed the disappointing result to the 2019 budget’s nearly four-month delay which had left new projects unfunded. To recall, the government operated on a reenacted 2018 budget from January to April 15, when President Rodrigo R. Duterte signed this year’s national budget into law but vetoed P95.3 billion in funds that were not in sync with state priorities, slashing the total to P3.662 trillion.
In a separate e-mail, Security Bank Corp. Chief Economist Robert Dan J. Roces said the slower gross revenue index in the second quarter “validates the lower than expected GDP growth for the same period.”
“The bright spots, however, were real estate whose value was unlocked by the infra push and POGOs (Philippine Offshore Gaming Operators); and commercial trade which benefited from easing inflation, elections spending, and increased tourism traffic,” Mr. Roces explained.
“These…, however, were not able to cover for manufacturing which contracted on the back of a global slowdown, low foreign direct investments and tepid international trade, amidst an escalating trade war,” he added.
Meanwhile, employment across key industries rose during the period as the total employment index grew by 1.9% compared to 1.3% in the second quarter last year. Sectors posting growth during the period were manufacturing (5.4%); real estate (5%); transportation, storage, and communication (4.4%); mining and quarrying (4.1%); trade (2.2%); electricity, gas and water supply (1.3%); and financial and insurance activities (0.7%).
On the other hand, construction and other services saw their respective employment indices decline by 2% and 0.1% during the period.
Compensation growth accelerated to 4.7% in the second quarter from 3.7% in the second quarter of 2018. Backing this growth were electricity, gas and water supply (10.9%); mining and quarrying (8.1%); manufacturing (7.1%); trade (5.8%); transportation, storage and communication (4.8%); real estate (4.4%); and financial and insurance activities (1.9%).
On a per-employee basis, compensation grew 2.7% from 2.3% last year.
“Gross revenue is expected to recover in the next quarter as the government continues its spending catch-up in the second half of this year,” UnionBank’s Mr. Asuncion said moving forward.