May factory output jumps 265% on low base effect

The total output of the country’s factories jumped 265 percent year-on-year in May mainly due to a low base in the same month in 2020 when most manufacturing operations ground to a halt due to the imposition of a strict COVID-19 lockdown.

The Philippine Statistics Authority’s (PSA) monthly integrated survey of selected industries (Missi) for May showed a faster increase in the volume of production index (VoPI)—a proxy for factory output—from April’s 155.6-percent climb.

In May last year, VoPI fell 73.2 percent due to the enhanced community quarantine which stopped 75 percent of the economy in a bid to control the spread of COVID-19.

The PSA said 18 of the 22 industries that the Missi report covered posted year-on-year growth in VoPI. Manufacture of coke and refined petroleum products posted the highest VoPI growth of 1,366.1 percent during the month.

“Quantitatively, any year-on-year growth in manufacturing becomes massive or magnified amid measures to further reopen the economy from lockdowns,” Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort noted in a report.

Meanwhile, tobacco manufacturing recorded the biggest year-on-year drop in production volume, at 68.7 percent.

The value of goods manufactured in May also rose by a faster 249.5 percent compared to the 145.5-percent hike in April. The growth in May’s value of production index (VaPI) reversed the 74.4-percent decline a year ago.

The biggest VaPI growth was also posted by the oil refining and coke manufacturing sector (up 1,472.7 percent year-on-year), while tobacco products manufacturing slid the fastest with 69.3-percent drop.

Ricafort said “the resumption of the refinery operations of Petron Corp. since June 2021 (after shutting down for four months) would also add to the growth in manufacturing activities.”

The ongoing mass vaccination program to resume business and consumer confidence as well as infrastructure development would also help manufacturing to rebound, Ricafort added.

Also, “the faster economic recovery prospects in the United States, China and other export markets … would support further recovery in Philippine exports and export-oriented manufacturing industries,” he said.

However, he said, the emergence of more contagious coronavirus variants entailed risk of further lockdowns and travel restrictions that could adversely affect domestic manufacturing activities.