Factory output shrinks faster in January
THE country’s manufacturing production, both in volume and value, contracted faster at the start of the year, which an analyst blamed on quarantines and other restrictions still in place to keep the coronavirus from spreading further.
Results of the Philippine Statistics Authority’s (PSA) latest Monthly Integrated Survey of Selected Industries (Missi) showed on Tuesday that the country’s volume of production index (VoPI) fell by 16.7 percent in January, quicker than December’s 12-percent drop and reversing the 1.9-percent growth a year earlier.
“The faster downturn in VoPI was brought about by the annual decreases [in 18 out of 22] industry divisions,” the statistics agency said.
These include the production of wood, bamboo, cane, rattan articles and related items at -53.4 percent; machinery and equipment except electrical, -48.9 percent; tobacco, -42.6 percent; coke and refined petroleum products, -35.3 percent; textiles, -34.8 percent; basic pharmaceutical products and pharmaceutical preparations, -26.4 percent; furniture, -26.0 percent; wearing apparel, -23.3 percent; nometallic mineral products, -21.2 percent; and beverages, -20.5 percent.
Meanwhile, the value of production index (VaPI) plunged by 21.1 percent, faster than the 15.4-percent decline a month earlier and the 1.7-percent drop in January 2020.
The PSA pointed to the yearly declines in 18 out of 22 industry divisions for this contraction.
These include the manufacturing of wood, bamboo, cane, rattan articles and related products at -53.5 percent; coke and refined petroleum products, -53.1 percent; machinery and equipment except electrical -51.0 percent; tobacco products, -40.5 percent; textiles, -35.5 percent; furniture, -29.8 percent; basic pharmaceutical products and pharmaceutical preparations, -26.4 percent; wearing apparel, -25.4 percent; and nonmetallic mineral products, -22.6 percent.
The drop in VoPi and VaPi in the first month were the lowest since November’s 20.1 percent and 23.8 percent, respectively, according to the PSA.
The sector’s average capacity utilization rate in January fell to 46.1 percent from 49.1 percent the month before, with seven out of the 22 divisions having a utilization rate of at least 50 percent.
These are the production of basic pharmaceutical products and pharmaceutical preparations, with 67.5 percent; wood, bamboo, cane, rattan articles and related products, 56.6 percent; printing and reproduction of recorded media, 56.1 percent; paper and paper products, 55 percent; computer, electronic and optical products, 52 percent; rubber and plastic products, 51.6 percent; and furniture, 50 percent.
Missi monitors the production, net sales, inventories and capacity utilization of selected manufacturing establishments to provide flash indicators of the industry’s performance.
In a comment, ING Bank Manila senior economist Nicholas Antonio Mapa told The Manila Times that both output indices indicated that “economic activity remains subdued due to ongoing lockdowns and the overall slowdown in economic activity, with the Philippines now neckdeep in the recession.”
The country is experiencing its first recession in decades after gross domestic product (GDP) shrank by 9.5 percent in 2020 after the community quarantines and other measures imposed to curb Covid-19 severely limited economic activities.
The figure is the lowest since the government started recording GDP data in 1946.
Mapa noted that global demand for products was also much lower than last year’s as world markets are still grappling with the negative impact of the pandemic.
“With the domestic economy still [in a] recession, we may have to contend with weaker output in the coming months, although base effects may help both VoPi and VaPi ‘bounce’ by Q2 (second quarter), but we are not expecting a return to pre-Covid 19 levels any time soon, with capacity utilization falling yet again, highlighting slack demand in the economy,” he said.