Industrial revenue growth accelerates in 4th quarter
INDUSTRIAL REVENUE in the fourth quarter of 2016 grew at its fastest pace in two years, the Philippine Statistics Authority (PSA) said in a report yesterday.
In its latest Quarterly Economic Indices report, the PSA said the gross revenue index, a measure of sales generated by companies across all industries, increased by 9.4% in the final three months of last year, up from 5.9% in the same period of 2015, and the strongest growth since the 10.1% in the third quarter of 2014.
The PSA ascribed the latest figure to faster revenue growth in real estate, manufacturing and trade.
Cid L. Terosa, economics professor at the University of Asia and the Pacific (UA&P), attributes the growth “to the strong and dynamic business and economic conditions of the country, particularly during the fourth quarter.”
“The fourth quarter is a time of rapid business and economic development because of spending associated with the holiday season,” Mr. Terosa said, referring to the traditional spike in consumer spending in the run-up to Christmas.
Real estate revenue grew the fastest at 13.4% from 12.7% the previous year, followed by manufacturing, which increased 10.6% from 3.5% over the same period. Trade revenue came in third, growing 9.2% from 6.7% in 2015.
“Real estate, manufacturing, and trade are the three sectors with the fastest rate of growth in the economy. This can be seen from numerous construction and real estate developments around the country,” said Mr. Terosa.
“The revival of manufacturing industries and the strong support given by government to them has enabled manufacturing to perform strongly. Trade, both wholesale and retail, is always a strong performer because the economy is driven by consumption spending,” he added.
Other sectors where revenue accelerated were finance (from 8.5% to 8.9%), and private services (from 2.2% to 6.6%).
Transportation and communication bucked the trend, with revenue growth slowing from 9.9% to 8.8%.
Ruben Carlo O. Asuncion, chief economist at the Union Bank of the Philippines (UnionBank), blames the slowdown on the “impact of the prevailing industry trend in transportation and communication (particularly in communication) where industry players have reported declines in their revenues and the overall changes happening in this specific industry in terms of demand and usage of services.”
While gross revenue across industries rose, employment however eased, with the total employment index slowing from 3.2% to 1.9%. Top contributors to employment growth were transportation and communication, real estate, and finance.
Despite the slowdown in employment, compensation accelerated, as the total compensation index grew by 6.5% in the latest quarter from the 6.1% the previous year. Contributing the most to growth were manufacturing, followed by private services and real estate.
The transportation and communication industry bucked the trend, with compensation contracting by 4.3%, a reversal of the 2.8% growth the previous year.
Mr. Asuncion said this was a “consequence of decline” of the industry’s gross revenue index.
Going forward, UA&P’s Mr. Terosa expects revenue among “real estate, manufacturing, trade, and private services to grow faster in the future.”
UnionBank’s Mr. Asuncion, on the other hand, said: “Real estate will continue its impact. Manufacturing will continue to grow especially with the intentions of the Duterte government to ramp up public expenditure on infrastructure development.”
“All industries directly related to infrastructure development will definitely have a windfall from the multiplier effect of huge amounts of infrastructure development funds,” he added. -- Jil Danielle M. Caro