Factory output slumps in March

Fastest decline in 6 months

Factory output dropped at a quicker pace in March, the fastest decline in six months, according to the Philippine Statistics Authority (PSA).

Factory output, as measured by the Volume of Production Index (VoPI), slumped by 73.4 percent in March, significantly faster than the 43.4 percent contraction in February and 20.4 percent decline in March 2020.

The PSA attributed the faster downturn in VoPI to the declines in five industry divisions led by the manufacture of coke and refined petroleum products which plummeted by more than 97 percent.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the massive decline in manufacturing was still a reflection of the sharp reduction in petroleum and refining activities amid closure and scaling down of operations by some of the big industry players.

The slow demand in the domestic economy since last year prompted firms to shift to importation of some refined petroleum products instead, he said, adding that the worst is not over for manufacturing as the lockdown since March would significantly affect the next data output release.

“Manufacturing could continue to slump into April and May as a function of the lockdown that reduced business activities, including manufacturing,” Ricafort said.

The manufacture of basic pharmaceutical products and preparations also contracted by 25.6 percent.

Slower annual contractions, however, were seen in tobacco products (44.5 percent), machinery and equipment except electrical ( 37.7 percent), and manufacture of textiles (0.6 percent).

Seventeen out of the 22 industry groups covered by the index registered growth during the month led by the manufacture of fabricated metal products except machinery and equipment (85.8 percent).

Most industry groups also posted double-digit gains including leather products (52.7 percent), printing and reproduction of recorded media (51.1 percent), and non-metallic mineral products (47.1 percent).

Other huge gainers also include computer, electronic and optical products, transport equipment, rubber and plastic products, electrical equipment, basic metals, paper and paper products, beverages,

chemicals, wood, bamboo, cane, rattan articles and related products, wearing apparel, furniture and food products.

The Value of Production Index (VaPI) likewise dropped at a faster pace of 74.2 percent in March from 46.4 percent in February and 25.1 percent in March 2020.

Further, capacity utilization slightly rose to 61 percent in March from 60.4 percent a month earlier.

Seventeen of the 22 industry groups reported a capacity utilization rate of 50 percent average led by furniture, manufacturing and repair and installation of machinery and electrical equipment.

Only 18.8 percent of responding establishments operated at full capacity.