Factory output growth rises to 10-month high

FILE PHOTO: Workers sew school uniforms at a textile factory in Marikina City. —MARIANNE BERMUDEZ

Local manufacturing output posted its best growth in 10 months in May despite the tariff-induced global uncertainty that is hurting both business confidence and international demand for Filipino products.

A monthly survey of selected industries showed the volume of production index (VoPI), a measure of factory output, grew by 4.9 percent year-on-year, the Philippine Statistics Authority (PSA) reported on Tuesday.

Data showed this was the strongest expansion of VoPI since July 2024, when manufacturing output grew by 7.2 percent.

In the first five months, the key gauge clocked in a 1.8-percent growth.

As it is, the purchasing managers’ index (PMI) report of S&P Global provided an insight into the health of the local manufacturing sector during the period.

The PMI, a separate measure of factory activity, eased to 50.1 in May from 53 in the preceding month.

‘Broad stagnation’

The reading nearly fell below the 50-mark separating growth from contraction—which S&P described as “broad stagnation” in operating conditions of Filipino factories amid the US trade war. As a result, export demand posted a “fractional” decline.

But PSA’s findings showed some pockets of strength.

State statisticians said the faster output expansion in May was driven by brisker production of food products (+15.7 percent) and transport equipment (+13.5 percent). Manufacture of chemicals, meanwhile, tempered its decline to -13.8 percent, from -23.8 percent previously.

At the same time, the average capacity utilization rate for the manufacturing sector slightly improved to 76.9 percent, from 76.7 before.

Moving forward, better conditions may be ahead for local producers based on advanced PMI estimates by S&P.

The PMI rose to 50.7 in June, thanks to stronger growth in new orders. Companies attributed this to successful customer acquisitions, improving underlying demand trends and effective promotional efforts.

S&P said this upswing in demand was enough to push production levels back into expansion territory last month, albeit only fractionally. Overall, S&P said the recovery in new orders convinced companies to hire more workers.