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Factory output slips again in December

The country’s manufacturing output continued to decline for the 10th straight month in December amid a coronavirus pandemic, the Philippine Statistics Authority (PSA) reported on Friday.

Preliminary results of the agency’s latest Monthly Integrated Survey of Selected Industries (MISSI) showed factory output, as measured by the volume of production index (VoPI), further declined by 2.8%, slower than the revised 8.6% drop in November and 7.3% decline a year earlier.

It was the softest decline in the 10 months since the government locked down many parts of the country to contain the pandemic.

This brought the average volume of production index to a contraction of 10.3% for 2020, worse than 8.4% drop in 2019.

The PSA traced the slower December decline to annual growth posted that month in five of 20 industry groups, namely paper and paper products (26.8%), chemical products (7.5%), electrical machinery (5.7%), food manufacturing (5.4%) and rubber and plastic products (4.9%).

Meanwhile, the value of production index (VaPI), a similar composite indicator in the survey, fell by 5.1% year on year in December from an 11.5% downturn in November. This was the 10th straight month for the contraction, though the slowest since January 2020.

The average value of production index shrank faster by 13.9% in 2020, worse than the 6.9% decline in 2019.
The average capacity utilization — the extent at which industry resources are used in producing goods — slipped to 72.8% in December from 75.6% in the previous month.

Only five of 20 industry groups posted at least 80% average use rate, namely machinery except electrical (88.3%), textiles (86.2%) and nonmetallic mineral products (82.7%).

The seasonal increase in spending and economic activities could have also helped the slower contraction in factory output in December, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. said in a note.

A possible easing in Metro Manila’s lockdown could help further reopen the economy, which may lead to a pickup in manufacturing activities, he said.

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