The country’s manufacturing sector is likely to suffer a sharp slowdown in the third quarter, according to the National Statistics Office (NSO), which reported on Wednesday that manufacturing output eased in August.

While still showing positive growth, the volume of production was slower in August at 2.1 percent compared to July’s 4.6 percent, according to the latest preliminary report on the Monthly Integrated Survey of Selected Industries (Missi) of the NSO.

Value-wise, production growth also slowed to 2.6 percent in August.  

Former Budget Secretary Benjamin Diokno noted that the average growth in terms of volume from January to August was 6.1 percent, sharply down from the 2010 average of 23.2 percent.

“The recent Missi numbers suggest a sharply slowing Philippine manufacturing. The deterioration in recent months suggests a poor third-quarter performance for manufacturing,” Diokno said.

“The numbers are consistent with the depressing electronics- exports performance and serious government underspending in public infrastructure,” he said. 

According to Diokno, this sharp slowdown was caused by low growth rates in the construction-related sectors. Volume of wood and wood products contracted 20.4 percent in the January-to-August period.

Other sectors that are showing signs of a slowdown include glass and glass products, basic metals, and iron and steel.

The weakness of the global economy is also negatively affecting export-oriented manufacturing sectors such as electrical machinery and transport equipment. 

Meanwhile, the average capacity utilization in August 2011 for total manufacturing stood at 83.3 percent, which means that around 11 of the 20 major sectors registered capacity utilization rates of 80 percent and more.

These sectors are basic metals, petroleum products, food manufacturing, electrical machinery, nonmetallic mineral products, miscellaneous manufactures, chemical products, paper and paper products, rubber and plastic products, machinery except electrical and textiles.

The proportion of establishments that operated at full capacity—or at 90 percent to 100 percent—was 15.5 percent in August. About 61.1 percent operated at 70-percent to 89-percent capacity while 23.4 percent of operated below 70-percent capacity, the NSO said.