Factory output posts huge rebound in April

MANILA, Philippines — Manufacturing activity recovered from a slump, posting a big hike in April as a majority of industry groups recorded gains, the Philippine Statistics Authority (PSA) said.

Factory output, as measured by the Volume of Production Index (VoPI), surged 162 percent in April, coming from a 73.3 percent contraction in March and 65 percent decline in April 2020.

The PSA attributed the faster upturn in VoPI to the growth of 20 industry divisions led by the manufacture of basic metals, which swelled nearly 700 percent.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the triple-digit sharp increase in manufacturing has been expected and is mainly due to a very low base from a year ago, both on the global and domestic fronts.

Last year’s lockdown, which was the strictest, prompted manufacturing industries to shut down or drastically reduce operating capacities.

Even as Metro Manila and the nearby provinces reverted back to strict quarantine in April, Ricafort said this coincided with the Holy Week when activities were low. Restrictions were eventually downgraded for the remaining two weeks of the month.

“The latest improvement in manufacturing data also partly reflects the strong recovery in exports to new record highs recently, as consistent with the strong recovery in exports well above pre-COVID levels for many countries around the world, thereby supporting some export-oriented manufacturing industries locally,” he said.

However, Ricafort said such a trend would only last until May or a few months thereafter, as economies re-opened in June resulting in higher base effects.

Twenty out of the 22 industry groups covered by the index registered growth during the month, led by the manufacture of basic metals at 687.5 percent.

Most industry groups also posted triple-digit gains, including fabricated metal products except machinery and equipment (610 percent), furniture (577 percent), wearing apparel (556 percent), transport equipment (437 percent), and printing and reproduction of recorded media (430 percent).

Also included are textiles (330 percent), non-metallic mineral products (307 percent), electrical equipment (247 percent), installation of machinery and equipment (217 percent), rubber and plastic products (168 percent), beverages (163 percent), leather products (149 percent), wood, bamboo, cane, rattan articles and related products (136 percent), and computer, electronic and optical products (104 percent).

Other huge gainers include food products, chemical products, paper and paper products, machinery and equipment except electrical, and tobacco products.

Contractions, meanwhile, were only recorded in coke and refined petroleum products at 32.3 percent and basic pharmaceutical products and preparations at 19 percent.

The Value of Production Index (VaPI) likewise saw a massive rebound of 154 percent in April from 74.2 percent in March and 66.6 percent in April 2020.

Further, capacity utilization on the average slightly rose to 63.6 percent from 63 percent the month before.

Eighteen of the 22 industry groups had at least 50 percent average capacity utilization rate, led by furniture, manufacture of other non-metallic mineral products, and electrical equipment.

Only 25 percent of responding establishments operated at full capacity.