Factory output grows in August as manufacturing keeps humming

MANILA, Philippines — Local factory output extended their growth streak in August, posting triple-digit expansion even as Metro Manila stayed in hard lockdown that month.

What’s new

The Philippine Statistic Authority’s monthly survey of industries reported that the volume of production index (VoPI), advanced 534.6% year-on-year in August, slightly slower than 537.9% in July.

This was the fifth straight month that VoPI grew. While base effects were mainly responsible for the superlative expansion, it was nevertheless a notable performance considering that hard lockdowns were imposed in Metro Manila and other areas in August to curb the spread of the hyper-contagious Delta variant.

Why this matters

Economic managers look to manufacturing output as gauge of the economy’s health. If factory owners sense any signs of economic slowdown, as seen in this pandemic, they could slash their workforce to save money which in turn will diminish productivity.

What analyst says

Sought for comment, Ruben Carlo Asuncion, chief economist for Unionbank of the Philippines, believes factories could sustain their growth trend, especially as inoculation efforts have improved.

“With NCR reaching more than 50% of adults vaccinated (and hopefully more Filipinos outside of NCR as well), manufacturing prospects are brighter compared to the same period last year. The improvements in tracing, testing and isolation all over the country may further support a more robust recovery in economic activities for the rest of the year,” Asuncion said in an e-mail exchange.

Other figures

• Sixteen industries grew in August, led by manufacture of coke and refined petroleum products at a pace of 3,800.9% year-on-year.
• Six industries, led by manufacture of tobacco products, saw output decline in the same month.
• More than one-fifth of factories were operating at full capacity, despite average capacity utilization inching down to 66.1% from 66.8% in July.