Slow demand after the holiday season led to the contraction of manufacturing output in December 2018, the National Economic and Development Authority (NEDA) said.

The Monthly Integrated Survey of Selected Industries (MISSI) of the Philippine Statistics Authority (PSA) reported that Volume of Production Index (VoPI) and the Value of Production Index (VaPI) for December 2018 declined by 10.1 percent and 9.3 percent, respectively.

This brings 2018 manufacturing to 7.2 percent in terms of volume (VoPI) and 8.0 percent in terms of value (VaPI).

“We have expected this decline because the holiday season is over. These figures could also indicate a likely tepid growth consistent with the latest Business and Consumer Expectations Survey of the Bangko Sentral ng Pilipinas,” Socioeconomic Planning Secretary Ernesto Pernia said.

Across product categories, lower output of major manufacturing items such as food, chemical products, tobacco, basic and fabricated metals, and machinery (except electrical), dragged total manufacturing output.

On the upside, a decline in rice prices, downward adjustment of electricity rates, and the slight appreciation of the peso may help improve consumer outlook and prop-up demand.

“Moreover, election-related spending is projected to benefit manufacturing subsectors such as food, beverage, tobacco and printing and paper products,” the NEDA chief said.

He added that the approval of the exemption of key infrastructure projects from the 2019 election spending ban will ensure implementation of national infrastructure projects under the Build, Build, Build program and minimize slowdown in economic growth.

“However, domestic oil price hikes and the upcoming El Niño could translate to price pass-throughs in manufacturing,” Pernia warned. DMS