Manufacturing continues decline in Feb.

FACTORY output continued to contract for the fourth consecutive month in February as manufacturers in all major sectors cut capacity due to weak demand brought about by the global economic crisis.

The National Statistics Office (NSO) report on Monthly Integrated Survey of Selected Industries showed that the volume of production index (VoPi) contracted by 21.1 percent in February compared with the 8.6-percent growth in the same period last year. In January, factory output fell 23.8 percent.

The agency blamed the contraction to the two-digit decreases in the manufacture of petroleum products, leather products, footwear and wearing apparel, basic metals, miscellaneous manufactures, transport equipment, machinery except electrical, publishing and printing, electrical machinery, paper and paper products, textiles, tobacco products, fabricated metal products, furniture and fixtures, food manufacturing, and chemical products.

On a month-on-month basis, factory output posted growth of 3.4 percent in February from the previous month’s two-digit decrease of 23.8 percent.

This was due to the two-digit increments in output noted in petroleum products, basic metals, furniture and fixtures, and fabricated metal products, the NSO said.

The NSO said only 11.7 percent of the 100 manufacturing firms surveyed operated at full capacity.

Average capacity utilization of these factories stood at 77.7 percent in February. Only seven major sectors registered capacity utilization rates of 80 percent and more, particularly basic metals, food manufacturing, paper and paper products, leather products, electrical machinery, miscellaneous manufactures, and chemical products.

More than half or 61.7 percent of the establishments operated at 70-percent to 89-percent capacity while 26.6 percent of the establishments operated below 70-percent capacity.

The value of production index (VaPI) for the manufacturing industry posted a slower year-on-year decline of 18.9 percent in February compared with the 9.5 percent growth in the same period in 2007.

The agency said this was because of the two-digit decline observed in petroleum products, leather products, basic metals, miscellaneous manufactures, footwear and wearing apparel, publishing and printing, transport equipment, machinery except electrical, tobacco products, electrical machinery, paper and paper products, and furniture and fixtures.

On a month-on-month basis, VaPI grew by 3.3 percent from the two-digit decrease of 27.8 percent recorded in January.

In addition, value of net sales went down by 20.7 percent in February, while volume of net sales dropped by 22.8 percent. –Darwin G. Amojelar, Senior Reporter, Manila Times