Advance Christmas orders fail factories as November output slides
MANILA, Philippines — The coronavirus pandemic brought no good tidings for local factories typically getting strong orders ahead of Christmas season, with manufacturing output sinking deeper into the red in November, all but confirming analysts' expectations.
The volume of production index (VoPI), a measure of factory output, plummeted 10.8% year-on-year in November, worse than 9.3% contraction in the previous month, the Philippine Statistics Authority reported Tuesday.
With output on a downtrend since March when lockdowns were imposed, hopes of a holiday boost from a spending public are getting dashed as factories were forced to lay off workers for most of 2020. All while those still in payrolls had to worry reporting to work daily amid lack of public transport.
Analysts’ advance estimates support a bleak ending to a challenging year. A day before government data was released, IHS Markit, a British information provider, estimated the Philippines’ purchasing managers’ index to have further fallen to 49.2 in December last year from 49.9 in November. A reading below 50 signals contraction.
“This may be good confirmation that consumption demand really took a big hit with COVID-19 still around and that the usual seasonal uptick may have been clearly affected by the pandemic,” Ruben Carlo Asuncion, chief economist at UnionBank of the Philippines, said in an online exchange.
“If December numbers confirm a change in trend with more easing of restrictions and controls in the economy, it would be easier to confirm if things are actually getting better,” he added.
Nicholas Antonio Mapa, senior economist at ING Bank in Manila, agreed with Asuncion’s assessment. “Annual contraction in VoPI shows that despite the relaxing of some restrictions, economic activity remains far below pre-pandemic levels,” Mapa said in an email.
Indeed, even those factories running are operating way below capacity. Average capacity utilization of manufacturers fell to 70.9% in November from 71.8% in October last year.
Breaking down the manufacturing report, only four industries grew in November namely miscellaneous manufactures, which expanded 14.7% year-on-year, followed by basic metals (12.1%), chemical products (5.1%) and wood and wood products (2.9%)
Even production of essential goods like food still struggled to get back to normal. Food coming out of factories shrank 1.3% annually in November, worse than the 0.3% decline in October.
Production of beverages was worse, plummeting an annualized 20.7% compared to the previous month’s 9.5% contraction, figures showed.
Overall, petroleum products led the pack of losers for November, sinking 61.9% from year-ago levels.
- Latest
- Trending
