ASEAN KEY DESTINATIONS
PHL factory output hurt by TRAIN —economist
The Philippine manufacturing industry failed to sustain its strength in January amid a slowdown in output growth and new orders, data released by Nikkei Philippines on Thursday showed.
And an analyst at IHS Markit noted the impact of the new tax reform law has a lot to do with the slowdown in manufacturing activity.
The Nikkei Philippines Manufacturing Index (PMI) registered at 51.7 in January, down from 54.2 in December, but higher than 50.0 in January 2016.
“While the Philippines manufacturing economy ended last year on a high, it started 2018 on a more modest note as demand was partially hurt by the new excise taxes,” Bernard Aw, principal economist at IHS Markit, said in a separate statement. IHS Markit compiles PMI data.
Signed into law by President Rodrigo Duterte in December, the Tax Reform for Acceleration and Inclusion (TRAIN) took effect in on January 1.
“[O]ne area of concern is the renewed pick-up in price pressures, which could pose as a downside risk to future growth,” Aw said.
“Survey data showed input costs increasing sharply and at one of the fastest rates in the survey history, pushing Filipino manufacturers to raise selling prices at a record pace,” he said.
Aw noted, however, that the slowdown is not expected to continue long-term and that manufacturers will increase output within the year.
“[O]ther survey indicators suggest that firms are likely to look past the near-term slowdown towards stronger growth in the year ahead,” he said.
“The Future Output Index remained elevated, with a majority of panel respondents anticipating higher production over the next 12 months,” he added.
Data from Nikkei showed the majority of its panelists continued to expect output growth in the months ahead.
“Reasons for optimism included higher sales projections, greater operating capacity, new products, planned business expansions and a robust economic outlook,” according to Nikkei.
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