MANILA -Factory output growth snapped three consecutive months of ascent after slowing down in October despite the seasonal surge in demand during the holiday season.
The Volume of Production Index (VoPI), a measure of manufacturing output, expanded 1.7 percent year-on-year in October, the Philippine Statistics Authority (PSA) reported on Thursday.
This was markedly slower than the 9.9-percent growth recorded in September.
The sluggish VoPI at the start of the fourth quarter—which usually marks the beginning of robust consumption driven by the holiday season—does not bode well for the manufacturing industry, a leading indicator for domestic demand.
But Domini Velasquez, chief economist at China Banking Corp., said the October reading “could be an outlier,” citing advance estimates showing a healthy expansion in output last November.
A separate survey by S&P Global showed the Philippines’ Purchasing Managers’ Index (PMI), another closely monitored gauge of manufacturing output, ticked up to 52.7 in November, from 52.4 in the previous month.
The latest PMI reading stayed above the 50-mark separating growth from contraction, which “signaled a further strengthening” of the local manufacturing sector, S&P said.
“A slowdown in producers’ prices will help support the manufacturing sector moving forward,” Velasquez explained.
“Right now, the major risks for the sector are higher-than-expected minimum wage hikes for regions which have not yet announced wage board decisions,” she added.
Broken down, the slow VoPI in October was due to the 33.9-percent year-on-year contraction in manufacture of beverages. Production of coke and refined petroleum products also slowed to 46.8 percent, from 78.5 percent in the previous month.
The average capacity utilization rate for the manufacturing sector in October was reported at 74.3 percent, from 74.4 percent in the previous month.