Manufacturing capacity utilization rebounds as Philippine economy reopens

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The manufacturing industry saw an uptick following an increase of the sector’s capacity utilization to 73.4 percent in May compared to 71.2 percent in April, the PSA report said in its monthly integrated survey of selected industries.

PSA’s reported the capacity utilization of some of the largest sub-groups food and beverage manufacturing increased to 76.6 percent and 67.0 percent in May compared to April, at 76.2 and 30.9 percent, respectively.

Of the 298 respondents, the survey results showed 21 percent of them have been operating at full capacity in May, while 13 percent of firms utilized their capacity below 50 percent.

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.

According to the National Economic and Development Authority, the recovery is expected to continue as the country’s economy slowly reopens.

“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,” Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said.

“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.”

Chua said the 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.

“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.”

The PSA’s monthly integrated survey of selected industries 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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