Factory output drops

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    The country’s manufacturing output dropped at a faster pace in November, amid double-digit declines posted in 16 industry groups, the Philippine Statistics Authority (PSA) said yesterday.

    The PSA said in a press release posted on its website the Volume of Production Index (VoPI), based on the latest Monthly Integrated Survey of Selected Industries, fell further at an annual decline of 10.8 percent in November 2020, from -9.3 percent in the previous month. In November 2019, VoPI decreased at a slower rate of -7.6 percent.

    “The downtrend in the VoPI for the sector was influenced by the two-digit decrements in the indices of 16 industry groups led by petroleum products (-61.9 percent), tobacco products (-58.6 percent) and printing (-51.5 percent),” the PSA said.

    Meanwhile, the Value of Production Index (VaPI) for manufacturing posted a downturn with an annual rate of 13.8 percent in November 2020.

    This contraction in VaPI was faster than the reported decreasein the previous month of 12.3 percent and the annual decline in November 2019 of 7.2 percent, the PSA said.

    “The November 2020 figure was the ninth consecutive month that VaPI had a negative growth rate,” the PSA said.

    “Contributory to the faster annual decline of VaPI for the manufacturing sector in November 2020 were the decreases in the indices of 17 industry groups. Among these industry groups, the top three were petroleum products (-66 percent), tobacco products (-56.9 percent) and printing (-50.8 percent),” it added.

    The PSA said based on responding establishments, the average capacity utilization rate for the manufacturing sector in November 2020 was at 70.9 percent from 71.8 percent in the previous month.

    Six of the 20 industry groups had at least 80 percent average capacity utilization rate, the PSA said, which was led by machinery except electrical (91.7 percent), followed by electrical machinery (85.4 percent) and furniture and fixtures (84.4 percent).

    “The proportion of establishments that operated at full capacity was 20.1 percent of the total number of responding establishments. More than forty percent operated at 70 to 89 percent capacity, while less than forty percent operated below 70 percent capacity,” the PSA said.

    Last Monday, IHS Markit said in its report the manufacturing sector’s business conditions deteriorated in December, still due to restrictions implemented to address the spread of the coronavirus pandemic.

    The IHS Markit Philippines manufacturing purchasing managers’ index fell to 49.2 in December from 49.9 in November, posting below the 50 neutral value that separates expansion from contraction.

    The report said the latest reading signaled a marginal deterioration in manufacturing conditions in December.

    Ongoing lockdown restrictions and poor weather contributed to a decline in output volumes in December, IHS Markit said, adding that although modest, the rate of decline was among the fastest in the series history.

    “December data was indicative of another contraction in operating conditions across the Filipino goods-producing sector. The pandemic, and ongoing restrictions have hit manufacturers hard, impacting both demand and output, which remained historically weak,” Shreeya Patel, economist at IHS Markit, said in the report.

    “The addition of material shortages and supply chain pressures placed pressure on operating conditions, whilst reduced output led to another month of sharp job cuts,” Patel added.