Industrial production growth increases in February

By means of Mariedel Irish U. Catilogo, Researcher

Factory output growth rose to the fastest in five months in February, driven by increased demand, the Philippine Statistics Authority (PSA) said on Friday.

Preliminary results from the PSA’s latest Monthly Integrated Survey of Selected Industries (MISSI) showed that factory output, as measured by the Volume of Production Index (VoPI), grew by 8.9% year-on-year in February, compared with 2.6% a year ago.

This was faster than the revised annual growth rate of 6.2% in January.

This was also the fastest growth in five months since the 9.5% growth in September 2023.

The sector’s production has been positive for twenty months in a row.

On a monthly basis, the manufacturing VoPI fell 0.9%, a reversal from January’s 4.4% growth. Excluding seasonal factors, production increased by 4.1% compared to the previous month’s decline of 0.3%.

Year to date factory output has averaged 7.5%, faster than the average growth of 4.6% recorded in the same period last year.

In comparison, the S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) fell to 50.9 in March from 51 in February. A figure above 50 indicates improvement for the manufacturing sector, while anything below indicates deterioration.

John Paolo R. Rivera, president and chief economist at Oikonomia Advisory & Research, Inc., said local and international demand supported the expansion of the manufacturing sector.

“Of [the] exchange rate showing a depreciation since last year from P54 per US dollar to P55-56 per US dollar this year, there is [an] incentive for increased production of export products, including computer, electronic and optical products,” he said in an email.

The VoPI of computer, electronic and optical products manufacturing recorded the highest annual increase at 13.4% in February, a reversal from a 1.4% decline in the previous month.

The statistics bureau said that industrial divisions’ VoPI growth in February was also led by production of coke and refined petroleum products (22.1% in February, compared to 49.2% in January) and production of food products (9 .2% compared to 5.2%). .

Meanwhile, production, repair and installation of machinery and equipment saw the largest decline at 23.7% in February, compared to the 12.9% decline in the previous month.

In a telephone interview, Sergio R. Ortiz-Luis, Jr., president of the Philippine Exporters Confederation, Inc. (Philexport), that the sector will continue to grow despite rising inflation.

“Inflation will play a small role in the operational calculation. I expect this growth to continue unless indicators go against it or factors such as rising inflation, exchange rates, geopolitical tensions, sanctions and logistics issues,” said Mr. Ortiz-Luis Jr.

Inflation rose to 3.7% on an annual basis in March from 3.4% in February, making it the fourth consecutive month in which inflation remained within the Bangko Sentral ng Pilipinas’ target range of 2-4%.

The average capacity utilization rate – the extent to which the industry’s resources are used in the production of goods – averaged 75% in February, compared to 75.2% in the previous month and 72.7% in February 2023.

All industrial divisions recorded an average capacity utilization of at least 60% for the month, with production of leather and related products, including footwear, recording the slowest growth at 62.9.

“Factory production is expected to trend upward given increased demand and the role of the exchange rate in boosting export production,” Rivera said.