Production Index Up

PI also referred to as industrial output index or industrial volume index, is an economic indicator that investors use to examine the growth or measure the real production output in
01 Nov 2014 14:15
Production Index Up

PI also referred to as industrial output index or industrial volume index, is an economic indicator that investors use to examine the growth or measure the real production output in the respective industries.

In the case of Fiji, the IPI is similar to manufacturing index used globally. A rise in the index means that our manufacturing sector output is rising  or  if the index is falling it means that output is declining.

Hence, a rise in the IPI would translate into a positive contribution towards economic growth.

In order to gauge changing volumes of output from industrial production, the index is compared to those of earlier periods.

The All Group Industrial Production Index for the June quarter of 2014 stood at 121.5 and is 21.5 per cent higher than the base year (2008) index of 100.0.

All Group Index is at its lowest in the March quarter and it begins to increase in the June quarter.

September quarter is when production is at its highest for the year and this is mostly reflective of volume of sugar production.

Most of the crushing is done in the latter half of the year due to sugar production being seasonal.  Given the significant weight for sugar in the index, an increase or decrease in its production volume is bound to impact on the overall index.

Conclusively, when comparing the second quarter of 2014 to the first quarter, the All Group Index recorded an increase.

The All Group Index including sugar increased by 5.38 per cent and the All Group Index excluding sugar also increased by 4.91 per cent.

Having said that, the domestic economy continues to churn gold and bauxite. An interesting note that the last quarter was an all-time production low since 2012. So there’s a recovery in mining.

Coming in second place is a growing soft drinks market that’s being driven by exports. The yagona market continues to show signs of recovery.

Concluding the top 3 domestic productions is Fertilizer, agrochemicals, paints and varnishes. Fertilizer I anticipate will be the next best industry, as food security becomes a global strategy.

Not to mention countries buying agriculture land in other countries. The bottom 3 are equally important, with Footwear being directly correlated to education.

The domestic market remains with a large demand for quality shoes that can weather our tropical setting. Completing the lower spectrum is paper and other paper articles.

Going green is a buzz word that has great potential for the domestic economy. Potential remains for a greater variety of paper to be produced in Fiji.

I leave you with a question of making paper versus exporting wood, making finished jewellery versus exporting gold.

In comparison against the March quarter of 2014, the All Group Index recorded an increase by 5.4 per cent due to higher volumes of production in:

– Mining and quarrying (101.17 per cent increase),

– Soft drinks, mineral water, yaqona and tobacco(10.03 per cent increase),

– Fertilizer, agrochemicals, paints and varnishes (9.32 per cent increase),

– Saw-milling and planning of wood, manufacture of products of wood and cork plaiting material (7.43 ),

– Sugar (9.3 per cent increase),

– Water (3.97 per cent increase).

– Dairy products and ice-cream (3.35 per cent increase),

– Rubber tyres and tubes, plastic products, glass and glass products (3.15 per cent increase),

– Structural metal products (2.02 per cent increase),

– Rice, flour and other grain mill products (1.72 per cent increase),

– Soap and detergent, other chemical products and pharmaceuticals (1.58 per cent increase),

– Cement, concrete, cutting, shaping of stone, basic metal, casting of metals (1.36 per cent increase),

– Bread, cakes and biscuits (0.84 per cent increase),

– Footwear and leather products (0.81 per cent increase),

– Pa-er (0.78 per cent increase),
This is an informative publication, sponsored by The Fiji Sun, Fiji Bureau of Statistics and HFC Bank. All views expressed or implied are purely of the Treasurer at HFC Bank, Peter Fuata.


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