Factory output falls at slower pace in August

MANILA, Philippines — Manufacturing output declined at a slower pace in August even with the reimposition of a strict lockdown in Metro Manila and surrounding areas during the month, the Philippine Statistics Authority (PSA) said.

Factory output, as measured by the Volume of Production Index (VoPI), declined at a slower pace of 9.8 percent in August coming from a contraction of 14.6 percent in July.

The Value of Production Index (VaPI) also declined at a slower pace of 13.8 percent in August from 17.2 percent in July. This marked the sixth consecutive month of contraction in the index and the fourth straight month that it declined at a slower pace.

Production remained limited during the month as seen in the slight decline in the average capacity utilization among manufacturing facilities to  65.3 percent in August from 66.9 percent the previous month.

Only a fifth of firms operated at full capacity during the month because of the prevailing community quarantine restrictions.

ING Bank Manila senior economist Nicholas Mapa said the diminished output in Metro Manila and surrounding areas during the two-week reimposition of the modified enhanced community quarantine (MECQ) may have been offset by increased output in other parts of the country where mobility restrictions were eased.

“MISSI (Monthly Integrated Survey of Selected Industries) numbers appear to be tracking the move in PMI (Purchasing Managers’ Index) manufacturing which would indicate some bounceback in activity from the lows seen in April and March.  And although we did see a return to a more stringent lockdown in the capital region and surrounding areas, we do note that other parts of the country continued to gradually ease their lockdown measures,” he said.

Mapa noted that firms could also be looking at replenishing their inventories in preparation for the upcoming holiday season.

“For the past two quarters we’ve seen a substantial drawdown on inventory across the sectors as noted in GDP and thus  firms may have been looking to replenish some of these stocks going into the holiday season,” he said.

From Aug. 4 to 18, the stricter MECQ was reimposed in Metro Manila, Bulacan, Cavite, Laguna and Rizal at the request of exhausted medical sector workers.

In August, the slower decline in production was brought about by increased output for chemical products and basic metals.

Slower declines were also seen for the other industry groups covered by the industry survey.