Connect with us

Hi, what are you looking for?

Economy

PHL firms’ gross revenues fall as pandemic persists

GROSS REVENUE generated by local companies continued to slump in the fourth quarter of 2020, as economic activity remained sluggish. — PHILIPPINE STAR/MICHAEL VARCAS

By Lourdes O. Pilar, Researcher

GROSS REVENUE generated by firms continued to decline in the final three months of 2020 as the economy remained in a pandemic-induced recession, the Philippine Statistics Authority (PSA) reported on Thursday.

The total gross revenue index (GRI) — a measure of sales generated by companies — fell by 12.4% year on year in the fourth quarter of 2020, according to PSA’s latest Quarterly Economic Indices report.

This was slower from the 13.1% decline recorded in the third quarter of 2020 but a reversal from 3.2% growth recorded in the fourth quarter of 2019.

Other services posted the largest fall during the quarter after dropping by 32.1%, a turnaround from 7.9% expansion last year.

Also seeing annual declines during the period were transportation, storage and communication (-29.6%); real estate (-27.3%); electricity, gas and water supply (-10.9%); manufacturing (-9%); and trade (-1.8%).

Bucking the downward trend were the indices for financial and insurance activities (8.8%) and mining and quarrying (6.9%).

“The culprit for the broad-based decline is of course the soft economic activity because of the pandemic,” Robert Dan J. Roces, chief economist at Security Bank Corp., said in an e-mail interview.

“Other services index declined the most as this category contains the sectors that were more vulnerable and sensitive to the ongoing community quarantine curbs and health protocols: recreational, personal services, private education, and hotels and restaurants,” he said.

ING Bank N.V. Manila Branch Senior Economist Nicholas Antonio T. Mapa said that the gross revenue index’s contraction reflects an economy in recession.

“Interestingly, the services sector constitutes the bulk of the economy and with the majority of the economy in some form of lockdown or with consumer confidence down, it’s easy to see why these sectors suffered the most,” Mr. Mapa said in a separate e-mail interview.

Meanwhile, the employment index fell by 10.3% in the fourth quarter compared with the 0.05% growth logged in 2019.

Companies in the following sectors shed jobs: transportation, storage and communication (-23.6%); other services (-18.3%); trade (-9.8%); real estate (-3.7%); manufacturing (-3.5%); and financial and insurance activities (-0.9%).

On the other hand, sectors that saw higher employment were construction (12.5%); mining and quarrying (4%); and electricity, gas and water supply (1.1%).

Compensation likewise dropped by 8.7% in the fourth quarter from a 4.9% growth a year earlier, led by construction (-27.1%); transportation, storage and communication (-25.2%); other services (-15.7%); trade (-8.1%); manufacturing (-4.9%); mining and quarrying (-4.7%).

Increases were observed at the indices of electricity, gas and water supply, financial and insurance activities and real estate with 25.1%, 11.4% and 5.5%, respectively.

On a per-employee basis, compensation grew by 1.8%, slower from 4.9% a year earlier using current prices. At constant 2016 prices, however, it shrank by 1.2% from a 3.3% growth last year.

Mr. Mapa expects the index to recover by the second quarter this year.

“As the economy reopens and base effects wash out, we may start to see some gains in GRI by second quarter, but we caution just like in GDP, these headline-grabbing growth prints will be more due to mathematics rather than a true economic rebound or recovery,” he said.

“With the economy stuck in low gear, we can expect GRI and GDP to experience only modest gains after favorable base effects fade.”

Mr. Roces, for his part, cautioned that the rising coronavirus disease 2019 cases will continue to constrain the pace of recovery.

“Gradual improvements in economic momentum are expected until a wider rollout of vaccinations takes place, thus we expect the gross revenue index to remain challenged,” he said.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

Investing

EasyJet plunged £213 million into the red in the Christmas quarter and is still burning through £150 million in cash each month, putting its...

Investing

A new range of healthy yet indulgent cookies will launch in Booths this month for just £1 per pack with the UK-born snacks by...

Investing

Payments firm Checkout.com has raised $1bn (£730m), giving it a $40bn (£29bn) valuation and crowning it the UK’s most valuable private fintech. The London-headquartered...

Investing

Sylvera, a UK-based startup that provides ratings for carbon offsets, has raised $32.6m (£24.1m) in a Series A funding round to accelerate and expand...

Investing

UK-based fintech Everything has raised €2m (£1.67m) to reinvent a decades-old financial product: premium bonds. The raise was led by a group of angel...

Investing

Boxt, a UK smart home heating startup that provides an “Uber-style” service for fitting boilers, electric vehicle chargers and air conditioning, has raised £20m...

You May Also Like

Investing

Having a good Instagram marketing agency to back up your Instagram account is an absolute must going into the new year. With competition stronger...

Economy

Ivermectin, an existing drug against parasites including head lice, has had a checkered history when it comes to treating COVID-19. The bulk of studies...

Investing

Insomnia is the most common sleep disorder in the global population. Therefore, it is a problem that many people suffer or have suffered throughout...

Investing

As a traditionally rigid insurance industry becomes bogged down by antiquated processes and operations, a handful of industry leaders are seeking to shake things...

Disclaimer: SmartRetirementReport.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 SmartRetirementReport. All Rights Reserved.