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The Philippine manufacturing sector registered a drop in June 2020 although at a slower pace from the previous month, latest figures showed.

Volume of Production Index (VoPI) declined 19.3% year-on-year in June 2020, a slower rate than May 2020’s drop of 28.5%, according to the Philippine Statistics Authority’s (PSA) latest Monthly Integrated Survey of Selected Industries.

Of the industry groups, petroleum products (15.3 %), wood and wood products (11.6 %) and chemical products (0.1%) registered positive growth in June. Previously, wood and wood products posted negative growth for five consecutive months, and chemical products for two consecutive months, PSA noted.

VoPI for the rest of the commodity groups was on a downtrend, of which 15 exhibited slower decline while two saw faster drops.

The Value of Production Index (VaPI) likewise contracted at a slower rate of 22.5% in June compared with the 31.2% decrease for May 2020. VaPI dropped for the fourth month in a row in June but had been showing a gradual recovery as it hit its second month with a slower annual decline.

Improvements for petroleum products and wood and wood products—with annual increases of 6.7% and 2.4%, respectively—contributed to the slower decline of VaPI in June 2020. Prior to the rebound, VaPI had negative growth for 17 consecutive months for petroleum products, and seven months of negative growth for wood and wood products. The indices of 16 of the 18 remaining industry groups also indicated slower annual drops, further tapering off the annual decline in VaPI.

Utilization up slightly

Average capacity utilization rate for the manufacturing sector in June 2020 inched up to 73% from 72.4% in the previous month.

Three of the 20 industry groups had at least 80% average capacity utilization rate: textiles (81.6%), furniture and fixtures (81.2%), and rubber and plastic products (80.7%).

One-fifth of the total number of responding manufacturing establishments operated at full capacity (90% to 100%). More than two-fifths (45.7%) operated at 70% to 89% capacity while more than one-third (34.3%) operated below 70% capacity.

“The declining trend has slowed down in June 2020, which reflected the gradual easing of quarantine restrictions,” acting Socioeconomic Planning Secretary Karl Kendrick Chua said in a statement.

The easing of various community quarantine measures in many parts of the country permitted the continuation of several public and private construction projects (e.g. quarantine and isolation facilities, rehabilitation works, sewerage projects, water service facilities and digital infrastructure, among others), subject to minimum public health standards and social distancing measures.

The country’s manufacturing performance, however, is still expected to be adversely affected by the ongoing global pandemic in the near term, Chua said.

The return to modified enhanced community quarantine (MECQ) status of Metro Manila, Laguna, Cavite, Rizal, and Bulacan for 15 days starting August 4, 2020 is also seen to make an impact.

“The return to MECQ in these areas is a difficult but important decision. Although this is expected to weigh down on the economy in the short term as resumption of business operations is limited, this will give our health system some respite amid the recent rise in COVID-19 cases. It will also help improve productivity in the near-term as more lives are saved and consumer confidence restored,” Chua said.

He added that with the rising COVID-19 cases in the country, the strict enforcement of containment measures by both government and the private sectors need to go hand in hand with the efforts to gradually reopen the economy to ensure that jobs and income are protected.

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