Manufacturing output down for 5th month as pandemic crimps business operations

Based on the results of the Monthly Integrated Survey of Selected Industries (MISSI), PSA said the Volume of Production Index (VoPI) contracted 11.9 percent in July 2020.
File photo shows an industrial park in Carmona, Cavite

THE country’s manufacturing output posted its fifth consecutive month of decline this year, according to the Philippine Statistics Authority (PSA).

Based on the results of the Monthly Integrated Survey of Selected Industries (MISSI), PSA said the Volume of Production Index (VoPI) contracted 11.9 percent in July 2020.

The contraction of the VoPI in July was an improvement compared to the past three months when it posted contractions of 12.5 percent in June; 24.5 percent in May; and 38.8 percent in April. 

“While manufacturing is not yet in the positive territory, the trends of the volume and value of production in the last three months indicate an improvement in the trajectory of economic activity. This momentum suggests a gradual recovery of demand in the coming months until the end of the year,” Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said on Friday.

Neda said the country’s manufacturing performance will remain subdued in the near term as businesses expect the pandemic to have a lingering impact on production.

To help encourage the resumption of business operations, Neda said the government will continue to enforce minimum health standards, which include wearing face masks and face shields and observing strict social distancing protocols.

“Sustaining the gradual and calibrated opening of the economy largely depends on the level of community quarantine that would allow businesses to operate and permit workers to remain mobile. To make this possible, safe and a sufficient availability of public transportation can be supported by service contract subsidies if needed,” Chua said.

Value of production

The Value of Production Index (VaPI) contracted 14.8 percent year-on-year. This marked the fifth month of consecutive double-digit contraction this year. 

The VaPI contracted the most in April at 41.3 percent followed by May at 27.3 percent. The July VaPI growth was still lower than the contraction of 12.7 percent in March. 

The PSA reported that average capacity utilization rate for manufacturing slightly decreased in July 2020. 

Based on responding establishments with responses on capacity utilization, average capacity utilization rate for the manufacturing sector in July 2020 slightly decreased to 75.4 percent from 75.8 percent in the previous month.

Seven of the 20 industry groups had at least 80-percent average capacity utilization rate. The groups were led by machinery except electrical at 86.5 percent, followed by printing at 83.3 percent; and textiles, 82.2 percent. 

“Almost one-fifth of responding establishments operated at full capacity,” PSA said.  

The proportion of establishments that operated at full capacity (90 percent to 100 percent) was 17.3 percent of the total number of responding establishments with responses on capacity utilization.

More than two-fifths or 46 percent operated at 70 to 89 percent capacity, and more than one-third or 36.7 percent operated below 70 percent capacity. 

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: Tupungato | Dreamstime.com


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