PH factory output inched up in January

MANILA, Philippines  — Local factory output posted marginal growth in January, no thanks to weak demand from the Philippines’ export markets.

A monthly survey of selected industries showed the volume of production index (VoPI), a gauge of manufacturing output, opened 2023 with a 1.9 percent year-on-year growth, slightly faster than 1.6 percent expansion back in December, the Philippine Statistics Authority (PSA) reported on Thursday.

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But the January VoPI was markedly slower than the 7.3-percent annualized growth recorded in the same month last year, data showed.

Broken down, 11 industries posted output declines, led by manufacture of textiles which dropped 31.5 percent, while only eight registered increases.

Capacity utilization at 74.5%

The expansion in VoPI in January was mainly brought about by the slower annual drop in the manufacture of computer, electronic and optical products at 7.1 percent. This marked an improvement compared to the double-digit decline of 16.5 percent in the previous month. This sector’s return to growth mode contributed 28.9 percent to the uptrend of VoPI in January.

Based on the PSA’s survey, the average capacity utilization rate for the manufacturing sector was reported at 74.5 percent in January, from 74.4 percent in the previous month.

The proportion of establishments that operated at full capacity (90 to 100 percent) was 26.7 percent of the total number of establishments polled by the PSA.

As it is, the latest results were mainly consistent with the report of S&P Global that showed the country’s purchasing managers’ index (PMI), another measure of factory output, easing to 50.9 in January, from 51.5 in December.

S&P said demand from clients overseas cooled. Looking forward, the group said global headwinds and sluggish demand from external markets, especially China, are likely to weigh on the domestic manufacturing sector.

But local factories are expected to show resilience despite the challenges, if advance estimate by S&P is to be believed. In February, the Philippines’ PMI went up to 51.0 even as supply chain problems put production to “near-stagnation.”