June manufacturing grew at slowest pace in 3 months
Factory output growth eased to a three-month low in June, brought about by the slump in the production of metals, transport equipment and refined petroleum products, the Philippine Statistics Authority (PSA) reported on Wednesday.
Preliminary results of the PSA’s latest Monthly Integrated Survey of Selected Industries (MISSI) showed that factory output, as measured by the Volume of Production Index, had grown by 2.5 percent year-on-year in June.
This was slower than the 3.2-percent growth in May, but faster than the 2.1-percent growth recorded in June last year.
“The basic metals industry faced reduced demand, likely due to slowdown in construction activities in key markets, while the transport equipment sector grappled with tightening profit margins amid fluctuating fuel prices and increased operational costs,” said Robert Dan Roces, chief economist at Security Bank Corp.
These sector-specific challenges were compounded by broader economic factors, including inflationary pressures and shifting consumer demand, which led manufacturers to adopt a more cautious approach, Roces added.
Meanwhile, John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, attributed the slowdown in manufacturing production to the inflationary pressures experienced in previous months.
He also noted that currency depreciation, which makes imports of raw materials more expensive, along with supply chain constraints, contributed to the softer growth.
The PSA attributed the slower growth in the manufacturing sector to the 17.7-percent deceleration in the production of basic metals, which declined further from a 2.8 percent contraction in May.
This was followed by a drop in transport equipment, which fell by 8.8 percent from a 1.2 percent contraction, and a slowdown in the manufacture of coke and refined petroleum products, which grew by 46 percent versus previous the previous year’s 52.7-percent growth.
Of the remaining 19 industries monitored by the agency, eight sectors recorded output decline, led by the manufacture of wood, bamboo, cane, rattan articles and related products at 60.2 percent from 51.2 percent.
To compare, S&P Global Philippines Manufacturing Purchasing Managers’ Index fell to 51.2 in June from 51.3 in the previous month. A reading above 50 marks improvement for the manufacturing sector while anything below indicates deterioration.
Despite the slowing growth, this marked the 11th straight month that the index settled above the 50 threshold that separates growth from contraction.
