MANILA, Philippines — Manufacturers produced less output in August but the decline sustained a softening from previous months, boosting optimism the upcoming holidays will finally swing output back to growth.
The volume of production index, a measure of factory output, shrank 9.9% year-on-year in August, marking the sixth straight month of decline, data from the Philippine Statistics Authority showed.
Related Stories
The annual performance nonetheless continued a trend of slowing contraction in output since the 37.6% slump posted at the height of strict lockdowns last April.
Government briefly returned Metro Manila and neighboring areas to enhanced community quarantine that month, but factory output survived that and declined slower than 12.5% drop in August last year.
“This can be attributed to more relaxed quarantine conditions and the adaptation of production activities to current conditions,” Cid Terosa, senior economist at University of Asia & the Pacific School of Economics, said in a text message.
Such assessment is backed up by data. If IHS Markit’s advanced purchasing managers index is of any indication, manufacturing output should have reverted back to expansion mode last month, 3 months since Metro Manila and key economic areas were transitioned to looser quarantine regime.
Ruben Carlo Asuncion, chief economist at UnionBank of the Philippines, said while the hard times may temper traditional holiday demand, and therefore production output, some optimism should not be discounted.
“Hopefully, these marked improvements will spell better-than-expected Ber months,” Asuncion said in an online exchange.
But Terosa was more cautious on his views, saying manufacturers may not experience growth until the second quarter of next year. “The rate of decline will be slower until the end of the year,” he said.
Breaking down Tuesday’s data, only two industries grew in August namely chemical products, which surged 17% year-on-year, and basic metals that increased output by 3.9% annually.
Meanwhile, essential goods still struggled to get back to normal despite long getting exempted from lockdown restrictions. Food production dipped 5.6% in August from year-ago levels, while beverages sank 13% in the same period. Both sectors however tempered their weakness from previous month.
Overall, petroleum products led the pack of losers for August, sinking 96.2% year-on-year after public transport was again restricted for 15 days in the capital, as well as the provinces of Laguna, Rizal Bulacan and Cavite.
Manufacturers were still beset by workforce limitations due to health protocols which hampered work. On average, factories operated at 65.3% capacity in terms of output in August, down 66.9% in the past month.