Factory output growth eases but remains robust in May

THE COUNTRY’S factory production continued to expand by double-digit pace for the fifth straight month in May, though at a slower clip than in the preceding month, the Philippine Statistics Authority (PSA) reported on Thursday.

Preliminary results of the PSA’s Monthly Integrated Survey of Selected Industries showed that factory output — as measured by volume of production — went up by 19.8% annually in May.

This was a reversal from the revised 0.6% decline in the same month last year albeit slower than the also-revised 29% uptick logged in April.

The May figure marked the fifth straight month of doubledigit growth. On the average, factory output volume has grown 21% so far this year, faster than

the 7.3% recorded in 2017’s comparable five months.

The latest result roughly jibed with IHS Markit’s seasonally adjusted Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI), which bared a score of 53.7 in May from 52.7 in April. A PMI reading above 50 suggests improvement in business conditions, while a score below signals deterioration.

Average capacity utilization, which is the extent by which industry resources are used in the production of goods, was estimated at 84.2% with 12 of the 20 sectors registering capacity utilization rates of at least 80%.

The National Economic and Development Authority (NEDA), in a statement, attributed May’s production growth to food manufacturing, petroleum products, construction- related manufactures, export-oriented products and transport equipment.

Driving growth in manufacturing were increases in the production of printing (117.8%), petroleum products (33.3%), food manufacturing (32.5%), miscellaneous manufactures ( 19.2%), textiles ( 18.8%), electrical machinery (17.4%), as well as rubber and plastic products (12.6%).

Michael L. Ricafort, economist at the Rizal Commercial Banking Corp. (RCBC), said May’s volume of production growth “may be partly due to the low- base/denominator effects.”