THE country’s manufacturing sector continued to suffer from low capacity in September as it posted a capacity utilization rate of below 70 percent for the third consecutive month this year, according to the Philippine Statistics Authority (PSA).
Based on the results of the Monthly Integrated Survey of Selected Industries (Missi), the average capacity utilization rate of the manufacturing sector was at 67.6 percent in September. Prior to this, the average capacity utilization was at 67.2 percent in August and 67.1 percent in July.
National Statistician Dennis S. Mapa said prior to July, the lowest average capacity utilization rate of the manufacturing sector was recorded 18 years ago in July and August of 2002 at 74.3 percent.
“Capacity utilization rate is the ratio of total output to the maximum rated capacity of the establishment. Rated capacity refers to the largest volume of output possible at which the factory can operate with an acceptable degree of efficiency taking into consideration unavoidable losses of productive time [i.e., vacation, holiday and repair of equipment] and availability of raw materials,” the PSA explained.
Data showed eight of the 20 industry groups had at least 80 percent average capacity utilization rate, led by machinery except electrical at 92 percent, followed by furniture and fixtures at 88.4 percent, and paper and paper products, 86.8 percent.
The PSA said that 42 percent of manufacturing firms operated below 70 percent and 40.3 percent operated at 70 to 89 percent capacity in September. Only 17.7 percent of the total operated at full capacity or between 90 percent and 100 percent.
Meanwhile, the Volume of Production Index (VoPI) for the manufacturing sector contracted 8.4 percent in September.
This is an improvement from the 9-percent decline in the VoPI in August 2020. However, this remains below the 6.5-percent contraction posted in September 2019.
“The major contributor to the slower decline in VoPI for the manufacturing sector in September 2020 were the two-digit expansions observed in basic metals and food manufacturing with annual increases of 14.4 percent and 10.2 percent, respectively,” the PSA said.
The PSA noted that the slower drop in the indices of 10 industry groups also tapered off the rate of decline in the index for the sector.
In terms of the Value of Production Index (VaPI), PSA data showed it posted a contraction of 11.9 percent in September 2020.
This was an improvement from the decline of 13.3 percent in the previous month. In September 2019, VaPI contracted 6.5 percent.
“The September 2020 figure was the seventh consecutive month that VaPI had a negative growth and the fifth straight month that it was declining at a slower rate,” the PSA said.
The PSA said the improvement in the VaPI versus the August data was due to the increases in the indices of four industry groups, namely, basic metals (12.3 percent), food manufacturing (11.6 percent), chemical products (5.6 percent), and miscellaneous manufactures (1.6 percent).
It said another factor that contributed to the slower drop in September 2020 for the sector were the slower declines in the indices of 10 industry groups.
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.