THE country’s manufacturing sector output continued to post a double-digit contraction in May, according to the latest data from the Monthly Integrated Survey of Selected Industries (Missi), according to the Philippine Statistics Authority (PSA).
The PSA said the Volume of Production Index (VoPI) contracted 40.3 percent in May 2020 from a contraction of 43.6 percent in April and 7.8 percent in May 2019.
The country’s Value of Production Index (VaPI) also declined to 42.1 percent in May this year, from 45.5 percent in April and 6.9 percent in May last year.
“The low production and sales indices for the manufacturing sector are expected given that most of the country was still on enhanced community quarantine (ECQ) in May. Demand was also subdued as people’s mobility remains limited,” Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua explained.
Recovery
“Despite this, we are seeing some signs of resurgence of the sector. As we transition to a new normal, we expect gradual recovery with improvements in logistics, particularly in the transport of essential goods and raw materials,” he added.
Chua said part of the recovery is reflected in the latest results of the Purchasing Manager’s Index (PMI), showing an improvement in manufacturing performance moving forward as the PMI rose from 40.1 in May to 49.7 in June.
In order to further support the recovery, the government will continue to provide assistance through grants, low-interest loans, credit guarantee, among others, to enable enterprises to safely resume business operations, Chua said.
He said the government will also support efforts of firms to redirect production to focus on the supply of essential goods and intermediate inputs, particularly for increasing the country’s capacity to address health and medical needs amid the pandemic.
“As more firms reopen, we need to remind everyone that the risk of Covid-19 infection remains. It is very important for firms to strictly comply with minimum health standards to mitigate risks in the workplace. We need to make sure that our workers’ health is not compromised and that we are able to contain the spread of the virus,” the Neda chief said.
As of May, the average capacity utilization rate was at 73.4 percent in May 2020, higher than the 71.2 percent posted in April 2020. This was largely due to the posting of at least 80 percent capacity utilization rate of a quarter of the 20 industry groups.
PSA data showed these were led by wood and wood products (91.7 percent), textiles (90.6 percent), footwear and wearing apparel (85.8 percent), rubber and plastic products (82.2 percent) and electrical machinery (81.4 percent).
Major revision
The Missi data showed that the VoPI data for April 2020 was significantly revised upward to a contraction of 43.6 percent from the initial estimate of a contraction of 59.8 percent.
The revision also covered the April VaPI, which showed it posted a contraction of only 45.5 percent from the earlier estimate of a contraction of 61.4 percent.
“This is due to the additional companies that reported [their data],” National Statistician Claire Dennis S. Mapa told the BusinessMirror via SMS.
Mapa said that particularly for the VoPI, an additional 15 firms from the food manufacturing sector submitted their data after the preliminary figures were released.
He added that there were other firms—35 from the chemical products and 19 from electrical machinery manufacturing industries—that submitted after the release of the April data last month.
These three groups (totalling an addition of 69 companies) accounted for “about 60 percent of the adjustment in the revised VoPI,” Mapa said.
Missi is a report that monitors the production, net sales, inventories and capacity utilization of selected manufacturing establishments to provide flash indicators on the performance of the manufacturing sector.
Image credits: Nonie Reyes