Manufacturing output faltered in November
The Philippine manufacturing sector was left at a standstill in November as output dropped and factory gate prices barely moved, according to the Philippine Statistics Authority (PSA).
A monthly survey of selected industries showed the volume of production index (VoPI), a measure of manufacturing output, slumped 1.5 percent year-on-year in November. This figure reversed October’s 1.4-percent gain, snapping the sector’s three-month growth.
State statisticians attributed the decline to slower production in food, beverages and refined petroleum products.
The manufacturing of coke and refined petroleum products posted the sharpest decline, falling 11.4 percent in November from just 2.7 percent in the previous month.
Growth in food manufacturing slowed to 4.2 percent from 8.1 percent in October. According to the PSA, the sluggish growth was driven by lower output in the manufacturing of vegetable and animal oils and fats, as well as the processing and preserving of meat.
Beverage production also sagged by 2.8 percent.
Leonardo Lanzona, labor economist at the Ateneo de Manila University, said, “This demand weakness itself may have been precipitated or exacerbated by earlier inflation, high cost of equipment and global uncertainty.”
“A most crucial factor, however, is the loss of confidence of both consumers and investors in the economy, thus creating a standstill in economic activity,” he added.
The PSA’s VoPI aligns with S&P Global’s November data, which showed local manufacturing activity at a four-year low.
Also weighing on the manufacturing sector’s overall growth is the slow pace of producer price index (PPI).
Based on the PSA’s survey of manufacturers, PPI in November was flat, rising by a marginal 0.1 percent year-on-year, largely due to a decline in the costs of manufacturing transport equipment. This was even more subdued than October’s 0.3 percent annual growth.
The manufacturing of transport equipment fell 0.1 percent in November, down from a 1-percent increase in the previous month. As the third-highest weighted industry in the PPI, it contributed 25.8 percent to the sluggish growth in November. INQ
Food manufacturing also posted a slower annual increase of 0.1 percent, down from 0.5 percent in October.
Meanwhile, the manufacture of computer, electronic and optical products declined 0.5 percent, reversing a slight 0.01-percent gain in the prior month.
Similar to the VoPI, demand also played a key role in the muted growth of PPI.
“The near-zero PPI is the key evidence that today’s main problem is a lack of pricing power due to soft demand,” Lanzona said.
“This is a classic demand-driven slowdown in the manufacturing sector. For policymakers, this shifts the focus from fighting inflation (a supply-side problem) to stimulating economic activity without reigniting price pressures—a delicate balancing act,” he added.
