Manufacturing output fell for the second straight month in April, the lowest in almost two decades after some factories remained shuttered amid a global coronavirus pandemic, the Philippine Statistics Authority (PSA) said on Friday.

Factory output as measured by the Volume of Production Index (VoPI) shrank by 59.8% from a year earlier, worse than the 7.7% and 14% contractions in March and April last year.

The April performance was the sector’s worst performance since 2001, the PSA said in a statement.

The average decline in the four months through April stood at 15.8% compared with the 9.1% drop a year earlier.

The agency traced the output decline to “significant decreases” in the indices of all industry groups. Leather products dove by 99%, footwear and apparel plummeted by 97.8% and furniture and fixtures fell by 91.7% due to “very minimal operations,” the PSA said.

A similar trend was observed in factory output as measured by the Value of Production Index, which plunged by 61.4%.

Average capacity use was at 70%. Only four of the 20 sectors registered capacity use rates of at least 80%.

In comparison, the Nikkei Philippines Manufacturing Purchasing Managers’ Index, which uses a different set of variables, dropped to 31.6 from 39.7 in March.

A reading above 50 indicates an improvement in business conditions from the previous month.

“All manufacturing subsectors posted double-digit negative growth rates in April 2020 given the imposition of community quarantines,” acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said in the statement.

“As we shift from an enhanced community quarantine to a general community quarantine, we will be seeing improvements in the succeeding months,” he added.

President Rodrigo R. Duterte locked down the entire Luzon island in mid-March, suspending work, classes and public transportation to contain a coronavirus pandemic.

He extended this twice for the island and thrice for the capital region. The lockdown in Metro Manila has since been relaxed.
“Definitely, this is due to the economic lockdown brought by the COVID-19 pandemic,” Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines said in an e-mail.

Philippine Exporters Confederation, Inc. (Philexport) President Sergio R. Ortiz-Luis, Jr. traced the slump to the health crisis, noting that a number of factories are located in regions that were locked down.

“It will take quite a while for the private sector to be able to fully operate because they need to comply with protocols,” he said by telephone.
Mr. Asuncion said he expects a “sluggish rebound” for the manufacturing sector until a vaccine for the novel coronavirus is found. — Jobo E. Hernandez

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