Manufacturing Output in Philippines Declines for the First Time in Nearly Two Years
Local factory output in the Philippines experienced a decline for the first time in almost two years in March, according to the Philippine Statistics Authority (PSA). The decrease in the Volume of Production Index (VoPI), which measures manufacturing output, was reported at 0.8 percent year-on-year. This marked a reversal of 20 consecutive months of growth, as reported by the March survey of companies in selected industries conducted by the PSA.
The drop in the volume of finished food products from factories by 8.1 percent in March had the most significant impact on the overall VoPI decline, as stated by the PSA. Another contributing factor to the sector’s performance was the growth in the manufacture of computer, electronic, and optical products, which slowed from 15.2 percent expansion in February to 5.3 percent in March. Similarly, production of coke and refined petroleum products also slowed to 10.2 percent from the 22.1 percent recorded in the previous month.
Out of the 19 industries monitored by the PSA, 12 saw declines in March, while seven reported increases. The manufacture of chemical and chemical products showed the highest annual growth rate at 29.1 percent.
A separate poll by S&P Global aligned with the PSA’s findings, indicating that the Purchasing Managers’ Index (PMI) for the Philippines remained stable at 50.9 in March. However, output contracted for the first time since July 2022 due to challenges with material shortages.
Despite the supply chain constraints, companies managed to keep their prices competitive by moderating their charges. This led to a minimal decline in selling prices for the first time in nearly four years. However, S&P noted that local factories remained less optimistic.
Looking ahead, there is hope for recovery as advance estimates from S&P show an increase in PMI to 52.2 in April, the highest in five months. This rebound was attributed to accelerated growth in new orders, sparking a solid rise in production. Additionally, demand from international markets also expanded at a stronger rate, according to S&P.
The PSA reported that the average growth of VoPI stood at 3 percent in the first quarter of 2024, lower than the 6 percent expansion seen in the same period last year.
