Factory output posts 9-month decline

The completion of infrastructure projects will improve transport and logistics, crucial in supporting the manufacturing sector.

Manufacturing output fell the past nine months in a series, led by the oil sector, based on official statistics.

The country’s manufacturing sector declined for the ninth consecutive month on the back of a steep drop in the manufacture of petroleum products.

The Philippine Statistics Authority’s (PSA) latest Monthly Integrated Survey of Selected Industries report showed that industrial output, as measured by the Volume of Production Index (VoPI), declined by 9.3 percent, reversing a 3.1 percent growth posted in the same period last year.

August’s contraction was also higher than the 8.1 percent posted in July 2019 that reversed the 10.1 percent growth year-on-year.

The PSA attributed the drop to seven industry groups, with petroleum products posting the highest annual decline of 59 percent, followed by furniture and fixtures by 43.4 percent, transport equipment by 19 percent, miscellaneous manufactures by 17.7 percent, and electrical machinery by 11.1 percent.

Likewise, the PSA said that the Value of Production Index (VaPI) dropped by 7.9 percent during the period, as compared with a 4.1 percent growth year-on-year.

In July, VaPI declined by 7.3 percent as compared with an 11.1 percent growth in the same month in 2018.

“The decrease of VaPI … was due to the annual decreases in the indices of nine major industry groups led by petroleum products (-61.8 percent), transport equipment (-18.5 percent), electrical machinery (-14.3 percent) and miscellaneous manufactures (-14 percent),” the PSA said.

During the period, the average capacity utilization rate of manufacturing facilities was at 84.3 percent.

Meanwhile, 65 percent or 13 out of the 20 major industries had at least 80 percent capacity utilization rates during the month.

The proportion of establishments that operated at full capacity stood at 26.9 percent of the total number of establishments for manufacturing in August 2019. About 55 percent of the total establishments operated at 70 percent to 89 percent capacity, while almost 18.3 percent operated below 70 percent capacity.

In a statement, Socioeconomic Planning Secretary Ernesto Pernia said that the government is banking on the speedy implementation of infrastructure projects to boost construction-related materials towards the end of the year.

“The completion of infrastructure projects will improve transport and logistics, crucial in supporting the manufacturing sector. An extension in the validity of the 2019 budget, particularly for infrastructure projects, and the immediate passage of the proposed national budget for fiscal year 2020 will assure sustained implementation of construction-related projects and activities,” he said.

Pernia added that infrastructure projects are seen to contribute to the increase in employment and disposable incomes, which will result in increased demand for consumer goods.

“Domestic demand is seen to be more favorable in the third quarter of 2019, with production of consumer goods such as food and beverages, tobacco, footwear and wearing apparel, and furniture and fixtures are expected to increase,” he said.

He said increasing efforts to promote technology and innovation would help prop up the manufacturing sector in the long run, through the adoption of digital solutions across sectors and the amendment of Foreign Investment Act of 1991.