July 7, 2020

The manufacturing sector is showing signs of recovery in May 2020 and is expected to continue its rebound as the Philippine economy gradually reopens, the National Economic and Development Authority said.

The recovery is seen in the increase in capacity utilization, as reported today by the Philippine Statistics Authority in its Monthly Integrated Survey of Selected Industries (MISSI).  As a whole, capacity utilization increased to 73.4 percent in May compared to 71.2 percent in April. In particular, capacity utilization of some of the largest sub-groups food and beverage manufacturing increased to 76.6 and 67.0 percent in May compared to April 2020, at 76.2 and 30.9 percent, respectively.

In addition, while year-on-year Volume of Production Index (VoPI) and Value of Production Index (VaPI) declined by 40.3 percent  and 42.1 percent, respectively, in May, they are better than the revised VoPI and VaPI of -43.6 and -45.5 recorded in April 2020.

Despite the dampened outlook, the latest results of the Purchasing Managers’ Index (PMI) points to an improved manufacturing performance moving forward as the PMI rises from 40.1 in May to 49.7 in June.

“The low production and sales indices for the manufacturing sector are expected given that most of the country was still on Enhanced Community Quarantine (ECQ) in May.  Demand was also subdued as people’s mobility remains limited. Despite this, we are seeing some signs of resurgence of the sector. As we transition to a new normal, we expect gradual recovery with improvements in logistics, particularly in the transport of essential goods and raw materials,” Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said.

To support local manufacturing, Chua said government will facilitate and support manufacturing firms that will redirect production to increase the supply of essential goods and intermediate inputs, particularly for increasing the country’s capacity to address health and medical needs amid the COVID-19 pandemic.

New infrastructure projects in areas such as health, digital economy, digital education and power will be prioritized. This will help increase construction activities and boost employment as well as increase demand on construction-related manufactures.

As majority of the country’s micro, small, and medium enterprises (MSMEs) have experienced significant financial difficulties, Chua said the government will also continue to provide assistance through grants, low interest loans, credit guarantee, among others, to enable enterprises to safely resume business operations.

“As more firms reopen, we need to remind everyone that the risk of Covid-19 infection remains. It is very important for firms to strictly comply with minimum health standards to mitigate risks in the workplace. We need to make sure that our workers’ health is not compromised and that we are able to contain the spread of the virus,” the NEDA chief said.

“The whole-of-government, led by NEDA, is currently reviewing strategies and policies in the Philippine Development Plan 2020-2022. A number of strategies need to be scaled up and fast-tracked, particularly as they relate to technology and innovation.  These will help firms and society, in general, become better prepared against future disruptions,” Chua said.

MISSI is a report that monitors the production, net sales, inventories, and capacity utilization of selected manufacturing establishments to provide flash indicators on the performance of the manufacturing sector.


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