The country’s factory output sustained its rebound for the third straight month in June, the Philippine Statistics Authority (PSA) reported on Friday.
Preliminary results from the PSA’s latest Monthly Integrated Survey of Selected Industries showed the volume of production index surging by 453.1% year on year in June, faster than the revised 263.2% annual growth posted in May. This was also a reversal of the 80.6% decline in June last year.
The June reading marked its third consecutive month of growth in manufacturing production following 13 straight months of decline.
Year to date, factory output growth averaged 22.4%.
The PSA noted annual increases in 19 out of 22 industry divisions in June led by the manufacture of coke and refined petroleum products (2,932.2%); fabricated metal products, except machinery and equipment (132.6%); and wood, bamboo, cane, rattan articles, and related products (85.7%).
Capacity utilization — the extent to which industry resources are used in the production of goods — averaged 67.7% in June, higher than the 66.6% recorded the previous month.
Of the 22 industry divisions, 18 exceeded the capacity use rate of at least 50%. Among these groups with the highest utilization rates were manufacturers of furniture (83%), other non-metallic mineral products (78.7%), and tobacco products (76.2%).
“The gradual re-opening of the economy that came with less restrictive quarantine restrictions has revitalized demand and motivated greater production, contributing to the rosier industrial production performance,” said University of Asia and the Pacific (UA&P) Senior Economist Cid L. Terosa in an e-mail interview.
“We cannot discount the possibility that many producers are priming themselves to quickly respond to stronger future demand by building up their inventories. This forward-looking expectation has contributed to the rosier industrial production performance,” he added.
In a separate e-mail, Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion attributed the June performance to base effects.
“Note that prints a year ago had deep declines. The positive number also represents a more open economy compared to last year’s stringent lockdowns,” Mr. Asuncion said.
Looking forward, the economists expect manufacturing production in July to exhibit continued growth as figures during period do not yet reflect the impact of the more infectious Delta variant of the coronavirus disease 2019 (COVID-19) on the economy. They noted that performance in the next few months would be volatile due to the reimposition of tighter lockdowns this month.
“Factory output in July will continue to be strong, but the strength of the recovery of manufacturing production will most likely be curtailed in August because of the heightened quarantine restrictions imposed on major manufacturing centers of the country such as the NCR (National Capital Region) and Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon),” UA&P’s Mr. Terosa said.
He likewise expects manufacturing to support the recovery of the agriculture and service sectors, provided that the pandemic response is addressed and managed effectively in the coming months.
For UnionBank’s Mr. Asuncion: “Manufacturing performance [for the rest of the year] will be a function of the handling of COVID-19 Delta variant spread, the pace of vaccinations, and the pandemic response in general,” he said.
Manufacturing managed to eke out an annual 0.5% gross value added (GVA) growth in the first quarter this year based on the PSA’s latest national accounts. This compares with the sector’s full-year performance in 2020 wherein its GVA declined by 9.8%.
The entire country has been under lockdown since the pandemic began in March 2020, although restrictions varied among the regions. — Lourdes O. Pilar