Feb factory output growth highest in 5 months on strong demand

BUSY SUMMER A clothes factory in Lapu-Lapu City should see increased output as companies ramp up to meet resurgent demand. —PHOTO COURTESY OF THE MEPZ WORKERS ALLIANCE

Local factory output posted its best expansion in five months in February on the back of resurgent demand for Filipino-made products, although headwinds are likely ahead.

A monthly survey of selected industries showed the volume of production index (VoPI)—a measure of manufacturing output—expanded 8.9 percent year-on-year in February, faster than the 6.2-percent growth in January and the fastest since September 2023, the Philippine Statistics Authority (PSA) reported on Friday.

Production of food products, which grew 9.2 percent, was the biggest contributor to the higher VoPI in February, the PSA said. Overall, 10 out of 19 industries covered by the survey posted year-on-year increases in output.

The reading was consistent with the results of a separate poll by S&P Global, which showed that the Philippines’ Purchasing Managers’ Index or PMI improved to 51.0 in February, from 50.9 in January, after “subdued” demand seen at the start of the year rebounded.

The PMI is another gauge of the health of the manufacturing sector.

According to S&P, there was a renewed rise in export sales in February, albeit “fractional.” It was the first time since November last year that appetite for Filipino manufactured goods improved in markets abroad.

Production problems

The stronger demand, in turn, prompted factories to beef up their purchases of raw materials and other production requirements. But S&P said companies encountered problems in fulfilling orders due to material shortages that slowed production to “near-stagnation” and depleted inventories at the fastest rate since January 2022.

If advance estimates by S&P Global are to be believed, the persistent supply chain problems likely continued to weigh on the performance of Filipino manufacturers in March.

While the PMI reading was broadly unchanged at 50.9 last month, S&P Global said local factory output contracted for the first time since July 2022. At the same time, growth in new orders “moderated” in March compared to February.

According to the PSA, average growth of VoPI stood at 7.5 percent in the first two months of 2024, better than the 2.6-percent expansion recorded in the comparable period last year. INQ