Manufacturing contracts in July

MANILA, Philippines — The domestic manufacturing sector contracted in July, a reversal of the double-digit growth in the same month last year, following declines in several major production subsectors, the Philippine Statistics Authority (PSA) said yesterday.

Factory output as measured by the Volume of Production Index (VoPI) contracted 1.1 percent in July compared with the 12.1 percent growth in July 2016, with eight out of 20 major manufacturing subsectors reporting significant decreases, among them chemical products (-52.6 percent) textiles (-20.3 percent), and rubber and plastic products (-13.9 percent).

The Value of Production Index (VaPI) also declined two percent in July, likewise a reversal of the 7.7 percent growth in July 2016. Seven major production subsectors registered declines, with chemical products, textiles and rubber and plastic products contributing greatly to the downtrend.

In July, factories operated at an average capacity utilization rate of 83.7 percent with facilities for petroleum products having the highest capacity utilization rate among industries (88.7 percent). Out of the 20 major industries, 12 operated at 80 percent capacity utilization and above.

Socioeconomic Planning Secretary Ernesto Pernia said the lower manufacturing output was likely a base effect, coming from a high growth figure in the comparative period last year.

“It’s possible,” he told reporters yesterday. “But we are upbeat on our outlook (for the remainder of the year).”

The Nikkei Philippines Manufacturing Purchasing Managers’ Index for July, released last month by IHS Markit, likewise showed slower manufacturing growth during the month. It attributed the combination of slower business activity to the continued imposition of martial law in Mindanao, slower overseas demand and input cost inflation.

The Value of Net Sales Index (VaNSI) likewise declined nine percent from a 3.8 percent growth in the same month last year. PSA said this was brought about by double-digit declines in non-metallic mineral products, as well footwear and wearing apparel.

The Volume of Net Sales Index (VoNSI) registered a year-on-year contraction of 8.1 percent in July from a growth of eight percent in July 2016. This was brought about by double-digit declines in footwear and wearing apparel and non-metallic mineral products.