By Lourdes O. Pilar, Researcher
REVENUE across all industries declined in the first quarter, the Philippine Statistics Authority (PSA) reported on Thursday.
Data from the PSA’s Quarterly Economic Indices (QEI) report showed total gross revenue index, which measures sales generated by companies, contracted by 4.9% in the three months to March, a reversal of the growth rates of 3.2% in the previous quarter and 8.3% in the first quarter of 2019.
Based on available data, the first-quarter reading marked the first time the index fell since switching to a 2016 base year from 1978 previously.
Declines were observed in four of the eight sectors in the index, with mining and quarrying falling 22.7% in the first quarter, a turnaround from the 3.7% growth it registered in the first quarter last year.
Other sectors showing slumping revenues were manufacturing (-13.2% from 6.2%); transportation, storage, and communication (-4.6% from 14.1%); and other services (-3.4% from 6.9%).
Meanwhile, these sectors posted growth in the first quarter, albeit at a slower pace compared to last year: electricity, gas, and water supply (1.5% from 4.7%); trade (2.7% from 11%); financial and insurance activities (13.6% from 15.1%); and real estate (3.7% from 9.8%).
Employment slipped by 1.7% in the first quarter compared to the 1.4% growth logged a year earlier.
Sectors posting contractions in employment during the period were: mining and quarrying (-7.3%); manufacturing (-3.7%); other services (-3.4%); construction (-2.8%); financial and insurance activities (-0.2%); and transportation, storage, and communication (-0.04%)
Compensation likewise registered a drop of 1.3% in the first quarter from a 3.5% growth a year earlier, led by financial and insurance activities (-8.5%); mining and quarrying (-8.5%); transportation, storage and communication (-5.8%); trade (-2.8%); manufacturing (-2.6%); and construction (-2.2%).
On a per-employee basis, compensation grew by 0.4% from 2% a year earlier using current prices. At constant 2016 prices, however, it shrank by 2.2%, accelerating from a 1.7% decline last year.
“The fall in gross revenue mirrors the contraction noted in the first quarter of the year, owing in large part to the March 15 lockdown, Taal Volcano eruption and slowing construction activity on uncertainty ahead of a then brewing epidemic in China,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.
“On particular industries, transport was likely hit by travel restrictions introduced in February, culminating in the total lockdown in March with airline travel grounded entirely during the enhanced quarantine. Land transport was also hit as all forms of transport, outside essential services, were halted due to the health crisis. Meanwhile, manufacturing saw weaker performance with the lockdowns implemented,” he added.
In a separate e-mail, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion attributed the declines to “non-pharmaceutical interventions” (NPIs) that were implemented in April to help slow down the spread of COVID-19 (coronavirus disease 2019).
“Manufacturing and transportation bore much of the early brunt of the economic lockdown, as part of the government’s NPIs. Although manufacturing was already set to recover at the beginning of 2020, the COVID-19 pandemic and the subsequent government containment responses initiated work stoppages. This also includes the mining and quarrying sector,” Mr. Asuncion explained.
Both economists expect a worse outcome for the index in the second quarter given earlier data releases during the period.
“[Second-quarter] revenue will also be downbeat, with unemployment surging in April while overall revenue and compensation lower as people lose their source of income,” ING Bank’s Mr. Mapa said.
For UnionBank’s Mr. Asuncion: “The NPIs are still in place in some areas as of today. However, April and May were the biggest hit months due to these virus containment measures. So, I do expect the second quarter to bear the biggest declines in gross revenue.”
To recall, the country’s unemployment rate surged to 17.7% in April from a year earlier, the highest since the government adopted new definitions for the Labor Force Survey in 2005, according to the PSA’s latest round of the survey. This translated to 7.25 million jobless Filipinos, more than three times from 2.27 million a year ago.
Moreover, around three million Filipinos have left the labor force in April, translating to a record-low participation rate of 55.6%.