Factory output falls for 10th straight month in September

MANILA, Philippines — Production output of the country’s factories declined for the 10th straight month in September, but the government expects a rebound in manufacturing ahead of the Christmas holiday season.

The Philippine Statistics Authority’s (PSA) Monthly Integrated Survey of Selected Industries (Missi) for September released Tuesday showed that the Volume of Production Index (VoPI) dropped 3 percent that month, nonetheless the smallest decline so far this year.

VoPI, which serves as a proxy for factory output, has been declining year-on-year since December last year, PSA data showed.

“Among the eight major industries that exhibited declines in VoPI, five major industries had two-digit decreases, namely: furniture and fixtures (30.1 percent), leather products (22.3 percent), petroleum products (17.3 percent), miscellaneous manufactures (13.5 percent), and electrical machinery (10.4 percent),” PSA said.

The Value of Production Index (VaPI) also fell for the 10th consecutive month, with September’s 2.3-percent contraction the smallest in eight months.

“Nine out of the 20 major industry groups registered annual declines [in VaPI], with two-digit decreases noted in the following major industry groups: leather products (28 percent), petroleum products (25.2 percent), electrical machinery (14.6 percent) and miscellaneous manufactures (11.9 percent),” according to PSA.

Despite the continuous decline in the headline volume and value indices, National Economic and Development Authority (Neda) Undersecretary and officer-in-charge (OIC) Adoracion M. Navarro noted in a statement that the following sub-sectors posted production increases last September: basic metals, beverages, chemicals, fabricated metals, machinery except for electrical, paper, plastic and rubber, printing, tobacco, and wood.

“Despite the slowdown in the overall performance of the manufacturing sector for September, we have observed improvements in various sub-sectors which can be attributed to the upcoming holiday season alongside lower inflation, stable exchange rate, and lower interest rate,” Navarro said.

“To boost the manufacturing sector over the near term, the government will need to push for high-impact and implementable infrastructure projects under the ‘Build, Build, Build’ program. This will sustain the demand for construction-related manufactures as more infrastructure flagship projects reach the construction phase. Moreover, it will contribute to more employment and higher disposable income, resulting in increased demand for consumer goods,” according to Navarro.

“We need to sustain infrastructure spending to achieve the national government’s target disbursement performance for the year. An extension in the validity of the 2019 budget, and the timely passage of the proposed 2020 national budget should be considered to avoid delays in the implementation of construction-related projects and activities,” Navarro added.