November 9, 2022 | 00:00
MANILA, Philippines — The country’s manufacturing output grew at a slower pace in September compared to the previous month and year amid high and sustained inflation.
Preliminary results from the monthly integrated survey of selected industries released by the PSA yesterday showed that manufacturing output, as measured by the volume of production index (VoPI), recorded an annual growth of 2.4% in September, lower than the 4.4% in August.
It was also well below the 124.3% expansion of VoPI in September last year.
The PSA said nine industry divisions posted year-on-year declines in September, with electrical equipment manufacturing posting the biggest drop of 54.7%.
Other industry groups with annual declines were base metals (34.2%), beverages (6.8%), coke and refined petroleum products (2.8%), rubber products and plastics (4.9%), furniture (11.5%), printing and reproduction of recorded documents. media (6.5%), tobacco products (3%) and non-metallic mineral products (0.3%).
Meanwhile, those that saw year-on-year increases in September were computer, electronic and optical products; transportation equipment; foodstuffs; machines and equipment other than electric; chemical and chemical products; fabricated metal products, except machinery and equipment; articles of wood, bamboo, cane, rattan and related products; paper and paper products; other manufacture, repair and installation of machinery and equipment; textiles; wear clothes ; basic pharmaceuticals and pharmaceutical preparations; and leather and related products, including footwear.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., attributed the slowing VoPI growth to higher inflation both locally and globally.
The country’s inflation rate accelerated to a nearly 14-year high of 7.7% in October from 6.9% in September.
Ricafort said high inflation or input prices could have slowed the growth of the manufacturing indicator “given the need to pay for more expensive oil or fuel, imported goods, other imports and other inputs (as these could also have reduced the availability of funds for consumer and business expenditures, new investments or expansion projects, and for other manufacturing or production activities), as well as a slowdown in demand in response to higher prices (some form of demand destruction, in response to higher prices).
He said higher interest rates that have increased borrowing or financing costs for some manufacturers may also have affected the performance of the manufacturing sector.
The PSA said the Value of Production Index (VaPI) recorded 10% growth in September this year, also slower than the 11.8% in August and the 124.6% increase in September of last year.
The PSA said 15 of the industry’s 22 divisions contributed to VaPI’s growth in September.
These are computer, electronic and optical products; foodstuffs; transportation equipment; chemical and chemical products; machines and equipment other than electric; coke and refined petroleum products; fabricated metal products, except machinery and equipment; articles of wood, bamboo, cane, rattan and related products; paper and paper products; other manufacture and repair and installation of machinery and equipment; non-metallic mineral products; textiles; wear clothes ; basic pharmaceuticals and pharmaceutical preparations; and leather and related products, including footwear.
Those that recorded declines in September were base metals; electrical equipment; beverages; printing and reproduction of recorded media; furniture; rubber and plastic products; and tobacco products.
The average capacity utilization rate in the manufacturing sector rose slightly to 71.5% in September from 71.4% in August.
“There were 20 out of 22 industrial divisions with an average capacity utilization rate above 60%, dominated by garment manufacturing (80.9%), furniture manufacturing (80.3%) and furniture manufacturing. computer, electronic and optical products (80 percent),” PSA said.
More than a fifth or 22 percent of responding facilities were operating at full capacity or at 90 to 100 percent.
Meanwhile, 39.1% were operating between 70 and 89%, while 38.9% were operating below 70% capacity.