Factory output picked up pace in Dec
MANILA —Philippine factories ended 2023 with a faster output growth, thanks to an extra boost to demand from the holiday season, especially among clients at home.
A monthly survey of selected industries showed that the volume of production index (VoPI), a measure of manufacturing output, had expanded 2 percent in December, faster than the 1.8 percent growth in November, the Philippine Statistics Authority (PSA) reported on Wednesday.
The industries with major contributions to VoPI growth in December were those engaged in manufacture of coke (coal-based fuel) and petroleum products, transport equipment and basic metals. The average capacity utilization rate for the manufacturing sector in December was reported at 74.3 percent, lower than 74.8 percent in the previous month.
READ: PH factories cap 2023 with slow growth, job cuts
But on a month-on-month basis, VoPI contracted 0.8 percent in December, a turnaround from the measly 0.7 percent sequential growth in November.
Buoyed by holiday demand
The results of the PSA’s survey was consistent with a separate poll of manufacturers by S&P Global, which reported that the Philippines’ Purchasing Managers’ Index (PMI), another gauge of the manufacturing sector’s health, fell to 51.5 in December, from November’s nine-month high of 52.7.
Although the latest reading stayed above the 50-benchmark that separated growth from contraction, the December PMI was the weakest in three months. S&P said strong domestic appetite for Filipino products was there amid the typical surge in demand during the holiday season. This prompted manufacturers to buy more production requirements to meet the demand.
But it was a different story overseas after firms reported that export sales had crashed for the first time in three months in December. That slump prompted companies to reduce their staffing levels, S&P said.
READ: Local factories buck regional slump, on 2-mo growth streak
Overall, 2023 was a challenging year for local manufacturers after a brutally high inflation and rising borrowing costs hurt demand for Filipino products. PSA data showed that VoPI grew at an average of 4.4 percent in 2023, a sharp slowdown from the 15.1 percent expansion in 2022.
But S&P said expectations of greater sales in the coming months prompted manufacturers to continue beefing up their inventories in January and hire more people after months of painful job shedding. —Ian Nicolas P. Cigaral
