Factory output declines for 10th straight month

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    Manufacturing output fell for the 10th consecutive month in September, data from the Philippine Statistics Authority (PSA) showed.

    Based on volume produced, the volume of production index (VoPI) of the Monthly Integrated Survey of Selected Industries (MISSI) of the PSA showed an annual drop of 3 percent for the period, compared to a 1.3 percent expansion for the same month last year.

    The PSA said eight of the 20 major industries surveyed have reported a decline, with five industries posting two-digit contractions — furniture and fixtures (-30.1 percent), leather products (-22.3 percent), petroleum products (-17.3 percent), miscellaneous manufactures (-13.5 percent) and electrical machinery (-10.4 percent).

    The decline in volume output coincided with a decline in the value of manufacturers’ output, with the value of production index (VaPI) recording a 2.3-percent contraction for the month compared to a 3.2 percent expansion last year.

    Nine major industries posted annual declines, with two-digit decreases noted in leather products (-28 percent), petroleum products (-25.2 percent), electrical machinery (-14.6 percent) and miscellaneous manufactures (-11.9 percent).

    Manufacturers’ sales as measured by the value of production index (VaPI) likewise contracted by 2.5 percent compared to an expansion of 6.7 percent last year.

    “The decrement in September 2019 of VaNSI (value of net sales index) was mainly influenced by the decreases in 10 major sectors led by machinery except electrical (-15.9 percent), textiles (-14.5 percent), and miscellaneous manufactures (-10.2 percent),” the PSA said.

    This was complemented by a decline in sales volume as measured by the volume of net sales index (VoNSI), which fell 2.4 percent compared to a 4.7 percent increase last year.

    “The slowdown was due to the annual decreases observed in nine major industry groups, with two- digit negative annual rates reported by the following: furniture and fixtures (-27.6 percent), textiles (-13.8 percent), machinery except electrical (-11.7 percent) and miscellaneous manufactures (-11.3 percent),” the PSA said.

    Manufacturers reported an average capacity use of 84.4 percent, with 13 industries reporting capacity utilization rate of at least 80 percent.

    “More than a quarter of total manufacturing establishments operate at full capacity
    The proportion of establishments that operated at full capacity (90 percent to 100 percent) was more than one- fourth (27.4 percent) of the total number of establishments for manufacturing in September 2019,” it said.

    “About 54 percent of the total establishments during the month operated at 70 percent to 89 percent capacity, while almost one-fifth (18.5 percent) operated below 70 percent capacity,” it added.

    But the National Economic and Development Authority is hopeful the upcoming holiday season and strong macroeconomic conditions will help boost manufacturing in the last quarter of 2019.

    “Despite the slowdown in the overall performance of the manufacturing sector for September 2019, we have observed improvements in various subsectors which can be attributed to the upcoming holiday season alongside lower inflation, stable exchange rate, and lower interest rate,” said Adoracion Navarro NEDA officer-in-charge and undersecretary for Regional Development.

    Navarro cited positive growth in beverages, tobacco products, basic metals, fabricated metal products, wood and wood products, machinery except electrical, chemical products, paper and paper products, printing, and rubber and plastic products.

    To boost the manufacturing sector over the near term, Navarro said the government will need to push for high impact and implementable infrastructure projects under the Build Build Build program.

    Navarro said the government also needs to scale up efforts to improve shared service facilities which will help farmers consolidate and engage in higher value-adding activities.

    Regulatory bottlenecks in the manufacturing sector will also have to be addressed, Navarro said. “