MANUFACTURING OUTPUT shrank for the second consecutive month in October, according to the Philippine Statistics Authority (PSA) reported on Friday.
Initial findings from the PSA’s most recent Monthly Integrated Survey of Selected Industries (MISSI) indicated that the factory output, as captured by the volume of production index (VoPI), decreased by 1.8% year on year in October, a slight improvement from the 5% drop in September. This marked a shift from the 1.4% increase observed a year prior.
On a month-to-month basis, the manufacturing sector’s VoPI rose by 2.8%, marking a reversal from September’s 2.5% decrease. Excluding seasonal influences, output contracted by 0.4%, which is an improvement compared to the 3.6% decline from the previous month.
For the period between January and October, the VoPI growth averaged 1.7%, compared to 5.4% for the same timeframe last year.
In contrast, the Philippines’ manufacturing purchasing managers’ index (PMI) from S&P Global for that month dropped to 52.9 from 53.7 in September.
A PMI score below 50 signals a contraction within the manufacturing sector, while a score of 50 indicates an expansion.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., mentioned that the VoPI experienced a slower decline due to adverse weather conditions, which limited the number of production days due to work suspensions.
“The slower decline (in VoPI) was prompted by the typhoons (that impacted) the Philippines. Work disruptions were reported in the most affected areas, as they were unable to operate due to the closure of production and manufacturing facilities,” Mr. Ricafort stated in a phone call.
The PSA credited the slower decline in October’s factory output growth to the annual growth rate of the beverage manufacturing sector, which recorded a growth of 6.8% compared to an annual decrease of 8%. The beverage sector represents the fifth-largest weight (6.7%) in total manufacturing, following coke and refined petroleum products (7.6%).
Additionally, contributing to the milder annual dip in VoPI in October were the manufacturing of wood, bamboo, cane, rattan items, and similar products, which increased by 26.4% in October from a 24.3% decrease in the previous month, along with transport equipment (rising by 6.7% from 3.2%).
All 22 industry divisions reported capacity utilization rates exceeding 60% in October.
The leading three industry categories based on capacity utilization rates were machinery and equipment except electrical (85.9%), other non-metallic mineral products (82.6%), and textiles (82.3%).
Mr. Ricafort anticipated a boost in the manufacturing sector in November and throughout the remainder of the year due to the Christmas season.
“There is significant demand during Christmas, as people have disposable income. It represents the largest spending season for many individuals. They receive their bonuses, and overseas Filipino workers send funds for holiday expenses,” Mr. Ricafort remarked. — Charles Worren E. Laureta
