Manufacturing output drops in August

CEBU, Philippines —  Philippine manufacturing output declined both in volume and value in August mainly due to decreased activity in major industry groups such as petroleum products, furniture and fixtures, transport equipment, electrical machinery, beverages, and miscellaneous manufacture, the Philippine Statistics Authority (PSA) reported on Friday.

This marks the eighth consecutive month for 2019 where total manufacturing indices are on a decline.

In its Monthly Integrated Survey of Selected Industries (MISSI), factory output, which is measured by the Volume of Production Index (VoPI) registered a 9.3 percent contraction in August 2019 from the 3.1 percent growth it posted in the same period last year.

PSA attributed the decline to the downward movements in seven major industry groups with petroleum products posting the highest annual decline of 59.0 percent, followed by furniture and fixtures (-43.4%), transport equipment (-19.0%), miscellaneous manufactures (-17.7%) and electrical machinery (-11.1%).

Meanwhile, the Value of Production Index (VaPI) for August likewise fell by 7.9 percent in August 2019 from a growth rate of 4.1 percent in the same period last year.

PSA data showed that the downtrend in VaPI was mainly due to the two-digit annual decreases in the indices of nine major industry groups led by petroleum products (-61.8%), transport equipment    (-18.5%), electrical machinery (-14.3%) and miscellaneous manufactures (-14.0%).

The National Economic and Development Authority (NEDA) said in a press statement that a “speedy implementation of infrastructure projects is seen to help sustain demand for construction-related manufactures towards the end of the year.”

“Fast-tracking the

implementation of infrastructure projects will help the manufacturing sector recover even with less optimistic business outlook as uncertainty in the global market remains,” Socioeconomic Planning Secretary Ernesto M. Pernia said.

On the other hand, production indices in construction-related manufactures registered notable increases in the volume and value of non-metallic mineral products (8.9% for VoPI and 12.7% for VaPI) and basic metals (16.5% for VoPI and 6.8% for VaPI). The sub-sector growth was attributed to the construction of new cement plants and also in part to the expansion in infrastructure spending of the government.

 “The completion of infrastructure projects will improve transport and logistics, crucial in supporting the manufacturing sector. An extension in the validity of the 2019 budget, particularly for infrastructure projects, and the immediate passage of the proposed national budget for fiscal year 2020 will assure sustained implementation of construction-related projects and activities,” Pernia said.

He added that infrastructure projects are seen to contribute to the increase in employment and disposable incomes, which will result in increased demand for consumer goods.

“Domestic demand is seen to be more favorable in the third quarter of 2019, with production of consumer goods such as food and beverages, tobacco, footwear and wearing apparel, and furniture and fixtures are expected to increase,” he said.

Pernia further said that increasing efforts to promote technology and innovation through the adoption of digital solutions across sectors and the amendment of the Foreign Investment Act of 1991 will prop up the manufacturing sector in the long run.