Local Factory Output Posts Strongest Growth in 5 Months Amid Resurgent Demand
MANILA, Philippines — Local factory output saw its best expansion in five months in February as demand for Filipino-made products surged, although challenges may lie ahead.
A monthly survey conducted by the Philippine Statistics Authority (PSA) revealed that the volume of production index (VoPI) — a key indicator of manufacturing output — grew by 8.9 percent year-on-year in February. This marked a significant improvement from the 6.2 percent growth recorded in January and the fastest growth rate since September 2023.
The PSA attributed the increased VoPI in February to a 9.2 percent growth in the production of food products, which was the largest contributor to the overall rise in manufacturing output.
According to a separate survey by S&P Global, the Philippines’ Purchasing Managers’ Index (PMI) also improved to 51 in February from 50.9 in January, reflecting a rebound in demand that had been subdued at the beginning of the year. The PMI serves as another gauge of the manufacturing sector’s health.
S&P Global reported a renewed uptick in export sales in February, albeit marginal. This marked the first improvement in demand for Filipino manufactured goods in foreign markets since November of the previous year.
However, the heightened demand led to challenges for factories as they struggled to meet orders due to material shortages, resulting in a near-stagnation of production and the fastest depletion of inventories since January 2022.
Looking ahead, S&P Global’s advance estimates suggest that supply chain issues may continue to impact Filipino manufacturers’ performance in March. While the PMI reading remained stable at 50.9 last month, local factory output contracted for the first time since July 2022. Additionally, growth in new orders moderated compared to February.
Despite these challenges, the average growth of VoPI stood at 7.5 percent in the first two months of 2024, outperforming the 2.6 percent expansion recorded during the same period last year.
