Manufacturing output slips at fastest pace in 5 months

MANILA, Philippines — Manufacturing output dropped at a quicker pace in February, its fastest decline in five months, as contractions were recorded in most industry groups, the Philippine Statistics Authority (PSA) said.

Factory output, as measured by the Volume of Production Index (VoPI), slumped 43.6 percent in February, significantly faster than the 12 percent contraction in January and reversing the 0.4 percent growth in February 2020.

The PSA attributed the faster downturn in VoPI to the declines of 19 industry divisions led by manufacture of coke and refined petroleum products, which plummeted 85.4 percent.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the massive decline in manufacturing reflects the sharp reduction in petroleum and refining activities amid scaled down operations by big industry players.

“This is in response to the slower demand in the local economy since the pandemic last year, partly shifting to importation of some refined petroleum products instead,” Ricafort said.

He added that the enhanced community quarantine toward the end of March until the early part of April could lead to further contraction in manufacturing activities, especially hard-hit non-essential businesses.

The manufacture of machinery and equipment except electrical also contracted 48.5 percent while the manufacture of textiles decreased 32.6 percent.

Other huge drops were also noted in the manufacture of wearing apparel, furniture, food, beverages, transport equipment, chemicals, rubber and plastic products, leather products, and printing and reproduction of recorded media.

Slower annual contractions, however, were seen in some industry groups such as tobacco products, basic metals, computer, electronic and optical products, pharmaceutical products, textiles, wood, bamboo, cane, rattan articles and related products, and non-metallic mineral products.

Only three out of the 22 industry groups covered by the index registered growth during the month.

These were fabricated metal products except machinery and equipment (18.7 percent), electrical equipment (11.2 percent), and paper and paper products (2.6 percent).

The Value of Production Index (VaPI) likewise dropped at a faster pace of 46.5 percent in February from 16.7 percent in January and 2.6 percent in February 2020.

Further, capacity utilization on the average fell to 53.8 percent in February from 56.7 percent the month before.

Fifteen of the 22 industry groups had at least 50 percent average capacity utilization rate, led by furniture, manufacturing and repair and installation of machinery and equipment, and computer, electronic and optical products.

Only 12.5 percent of responding establishments operated at full capacity.