MANUFACTURING OUTPUT contracted to second straight month in October, the Philippine Statistics Authority (PSA) reported on Friday.

Preliminary results in the PSA’s latest Monthly Integrated Survey of Selected Industries (MISSI) showed that the factory output, as measured by the volume of production index (VoPI), fell by 1.8% year on year in October from the 5% decline in September. This was a reversal from the 1.4% growth a year earlier.

On a month-on-month basis, the manufacturing sector’s VoPI increased by 2.8%, a turnaround from the 2.5% contraction in September. Stripping out seasonality factors, output declined by 0.4%, slower compared with the 3.6% contraction last month.

From January to October period, VoPI growth averaged 1.7%, than the 5.4% in the same period last year.

To compare, the Philippines’ manufacturing purchasing managers’ index (PMI) of S&P Global for that month eased to 52.9 from 53.7 in September.

A PMI reading below 50 marks a contraction in the manufacturing sector, while 50 marks an expansion.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said that that VoPI has a slower decline due to inclement weather, which decreased of the production dates prompted by the suspension of the working days.

“The slower decline (in VoPI) was due to the typhoons (that entered) in the Philippines. There were work disruption in heavily hit areas. They were not able to work because the production and manufacturing facilities were closed,” Mr. Ricafort said in a phone call.

The PSA attributed the slower decline in October’s factory output growth to the annual growth rate of manufacture of beverages industry division at 6.8% from an annual drop of 8%. The beverages industry division account for fifth-largest weight (6.7%) of total manufacturing, after coke and refined petroleum products (7.6%).

Also contributing to the slower annual decline of VoPI in October were the manufacture of wood, bamboo, cane, rattan articles and related products, which rose by 26.4% in October from 24.3% drop in the previous month, and transport equipment (up by 6.7% from 3.2%).

All 22 industry divisions reported capacity utilization rates of above 60% in October.

The top three industry categories for capacity utilization rates were machinery and equipment except electrical (85.9%), other non-metallic mineral products (82.6%), and textiles (82.3%).

Mr. Ricafort said there will be an uptick in in manufacturing sector in November and for the rest of the year due to Christmas season.

“There are a lot of demand in Christmas, since people have income. It is the biggest spending for many people. There get their bonus, and the overseas Filipino workers send money for Christmas spending,” Mr. Ricafort said. — Charles Worren E. Laureta