Factory output declines for fourth straight month

FACTORY OUTPUT extended its losing streak for a fourth month in June, the Philippine Statistics Authority (PSA) reported on Wednesday.

Preliminary results of the PSA’s latest Monthly Integrated Survey of Selected Industries, showed factory output — as measured by the volume of production index — falling 19.3% year on year in June, easing from a decline of 28.5% in May. A year earlier the decline was 9%.

In the first half, factory output fell 13.8%, against a decline of 8.8% in the same period year.

Seventeen of the 20 sectors posted declines in June led by printing (-63.3%), transport equipment (-59.6%), and tobacco products (-58.7%).

Bucking the trend were petroleum products (15.3%); wood and wood products (11.6%); and chemical products (0.1%).

Capacity utilization averaged 73.0% in June. Only three of the 20 sectors registered capacity utilization rates of at least 80%.

In a statement, the National Economic and Development Authority said the manufacturing sector “exhibited slight improvements,” pointing to the slower declines compared with the previous month.

“The declining trend has slowed down in June 2020, which reflected the gradual easing of quarantine restrictions,” Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said in the statement.

The slower rate of decline was attributed to the easing of community quarantine measures that allowed the resumption of public and private construction projects such as quarantine and isolation facilities, sewerage projects, and digital infrastructure among others. These, in turn, partially boosted demand for construction-related manufactures.

Mr. Chua said the manufacturing sector is expected to “still be affected by the ongoing global pandemic in the near term.”

President Rodrigo R. Duterte put Metro Manila, Laguna, Cavite, Laguna, Rizal and Bulacan back under modified enhanced community quarantine (MECQ) to slow the rise in COVID-19 (coronavirus disease 2019) cases. The new lockdown began on Aug. 4 and will last until Aug. 18 after exhausted health workers asked for a “time out” to ease the pessure on the healthcare sector.

The rest of the country is still under modified general community quarantine except for Batangas, Lapu-Lapu City, Mandaue City, Talisay City, Minglanilla, Consolacion and Zamboanga City, which were placed under a general lockdown.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that while the worst of the lockdowns in April and May are behind us, the government’s recent decision to revert to MECQ “could be a drag on prospects of recovery on the economy and the country’s manufacturing sector.”

“Manufacturing activities and prospects of recovery could be reduced at the moment, until the MECQ is relaxed and the local economy, together with the various manufacturing activities, further re-open again,” Mr. Ricafort said in an e-mail.