By Carmina Angelica V. Olano, Researcher
REVENUE across all industries grew in the fourth quarter of 2018 on account of stronger sales in key industries, the Philippine Statistics Authority (PSA) reported yesterday.
The total gross revenue index — a measure of sales generated by companies — expanded 9.5% in the final three months of the year according to PSA’s latest Quarterly Economic Indices report. This was faster than the 8.11% recorded in the third quarter of 2018 and 8.86% in the fourth quarter of 2017.
Expansion was observed across all industries during the period. Leading the way were private services whose revenues grew 9.95% in the fourth quarter of 2018, albeit easing from 10.6% in 2017’s comparable three months.
Growth was also observed in manufacturing (9.85% from 7.68%); trade (9.61% from 9.46%); and transportation and communication (5.88% from 5.14%).
Meanwhile, growth was slower in finance (9.05% from 10.24%) and real estate (8.57% from 11.05%).
In an e-mail to BusinessWorld, Rizal Commercial Banking Corp. (RCBC) economist Michael L. Ricafort said the slightly faster gross revenue growth “came somewhat as a surprise” amid the slower economic growth and elevated inflation in the fourth quarter of 2018.
To recall, fourth-quarter gross domestic product (GDP) growth was 6.1%, which is slower than the 6.5% growth recorded a year earlier. Further, last year saw inflation picking up for nine straight months, peaking at a nine-year-high 6.7% in September and October.
Despite this, Mr. Ricafort said that the increase in revenues “reflects the resilience of various industries” despite subdued global economic growth.
“Various allied/related industries may have benefitted from the faster growth in government spending especially on major infrastructure spending (Build, Build, Build program), continued pickup in manufacturing/industry growth amid sustained growth in investments,… and the continued growth in construction and real estate,” he said.
Meanwhile, PSA data show employment growth in these companies slowing during the period, with the total employment index increasing by 1.5% albeit slightly slower than last year’s 1.6%.
Sub-sectors that showed employment growth were trade (3.3% from 0.2%), transportation and communications (3.2% from 2.6%), private services (2.6% from 0.7%), finance (1.5% from 0.5%), electricity and water (1.2% from 1.6%), and manufacturing (0.7% from 2.2%).
On the other hand, contractions were seen in mining and quarrying (-6.9% from 0.7%), and real estate (-0.1% from 2.9%).
Total compensation accelerated to 5.9% in the fourth quarter from 5.8% in the same period in 2017. All sub-sectors posted growth, with private services recording the fastest growth (10.3% from 3.7%) in total compensation.
On a per-employee basis, compensation grew 4.4% from 4.1% last year.
Moving forward, RCBC’s Mr. Ricafort said the tamer inflation environment and continued government spending on infrastructure will allow industries to sustain their revenue growth.
“Revenues of all industries may grow at a faster pace in the coming months of 2019 amid easing trend in both local inflation and local interest rates that lead to increased sales fundamentally due to higher incomes and purchasing power of consumers…as well as various industries,” he said.
At the same time, Mr. Ricafort cautioned that current developments may pose risks to this outlook.
“Offsetting risk factors include slower global economic growth and global trade largely due to the lingering US-China trade war, China’s economic growth (among the slowest in 30 years), [and] any prolonged delay in the 2019 Philippine national budget,” he said.
The national government has been operating under a re-enacted budget with the latest spending plan yet to be signed by President Rodrigo R. Duterte. Congress ratified the 2019 budget only on Feb. 8 following months of bicameral bickering over alleged irregular fund insertions. This has left new programs and projects unfunded at least for the first quarter — which could cut economic growth by 1.1-2.3 percentage points.