Factory output declines at slower pace in December

MANILA, Philippines — Manufacturing output declined at a slower pace in December as more industry groups had narrower downturns, the Philippine Statistics Authority said.

Factory output, as measured by the Volume of Production Index (VoPI), declined by 2.8 percent in December, slower than the 8.6 percent contraction in November and 7.3 percent decline in December 2019.

Five out of the 20 industry groups covered by the index registered growth during the month. These were: paper and paper products (26.8 percent), chemical products (7.5 percent), electrical machinery (5.7 percent), food manufacturing (5.4 percent), and rubber and plastic products (4.9 percent).

Slower annual contractions were also seen in several industry groups such as petroleum products, machinery, tobacco products, non-metallic mineral products, printing, textiles, fabricated metal products, beverages and leather products.

The Value of Production Index (VaPI) likewise declined at a slower pace of 5.1 percent in December from 11.5 percent in November and 6.8 percent in December 2019.

Capacity utilization on the average fell to 72.8 percent in December from 75.6 percent in November.

Five of the 20 industry groups had at least 80 percent average capacity utilization rate, which was led by machinery except electrical, textiles and non-metallic mineral products.

About 16 percent of responding establishments operated at full capacity.

Meanwhile, the Purchasing Managers’ Indexes in December showed weak demand  and operating conditions despite being a holiday season.

Muted domestic demand caused firms to reduce production and downsize their workforce in December. Firms also purchased less raw materials and lowered the inventory level of finished goods.