Factory output continues downtrend in September

MANILA, Philippines – Local manufacturers cut back output for the 11th consecutive month in September, underscoring a weak industrial activity as the economy continued to suffer from the effects of the global economic slowdown, analysts said.

Factory output as measured by the Volume of Production Index (VoPI) declined by another 12.4 percent in September. The latest drop, however, was slower than the revised 13.5 percent decline reported in August this year.

“Ten major sectors reported output cuts, with two-digit declines in petroleum products, leather products, beverages, footwear and wearing apparel, paper and paper products, tobacco products, textiles, chemical products, wood and wood products, and electrical machinery,” the NSO said.

According to the NSO, the manufacturing sector’s performance had been negative since November last year, when the index tumbled by 5.5 percent followed by a sharp 14.2 percent contraction in December.

On a month-on-month comparison, the volume of production index posted a 6.5 percent growth, a notable turnaround from the 1.5 percent slide last month.

According to the NSO, the reversal in production performance of six major sectors of the manufacturing industry contributed much to the increase. Sectors that performed well in August were: electrical machinery, beverages, transport equipment, petroleum products, paper and paper products and machinery except electrical.

The NSO also reported that manufacturing output as measured by the value of production index (VaPI) declined by 15.4 percent in September. VaPI measures output in terms of prices.

Most factories had an estimated 81.9-percent average capacity utilization rate. The average capacity utilization rate measures how much of the manufacturing sector’s production capacity was actually used during the survey period.

“The proportion of establishments that operated at full capacity (90 percent to 100 percent) was 10.8 percent in September 2009. About 64.4 percent of the establishments operated at 70 percent to 89-percent capacity while 24.8 percent of the establishments operated below 70-percent capacity,” the NSO said. –Rica D. Delfinado (The Philippine Star)