Factory output growth picks up in January

The country’s factory output went up at a quicker pace in January from the previous month due mainly to the slower contraction in production of electronic products and beverages, according to the Philippine Statistics Authority (PSA).

Preliminary results of the Monthly Integrated Survey of Selected Industries conducted by the PSA showed manufacturing output as measured by Volume of Production Index (VoPI) posted a slightly faster growth rate of 1.9 percent in January from 1.6 percent in December 2023.

The latest VoPI growth, however, is lower than the 7.3 percent increase in January 2023.

“The expansion in the annual growth of the 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 compared to the double-digit annual decline of 16.5 percent in the previous month,” the PSA said.

Also cited as a main contributor to the VoPI growth was the beverages industry division as it posted a slower decline of 0.3 percent in January from the 14-percent contraction in December 2023.

The PSA said the fabricated metal products, except machinery and equipment industry division, was another main contributor to VoPI growth as it posted an 11.5-percent increase in January from the 11.7-percent drop in the previous month.

Of the remaining 19 industry divisions tracked by the PSA, eight posted positive growth rates in January: coke and refined petroleum products, electrical equipment, paper and paper products, wearing apparel, tobacco products, chemical and chemical products, printing and reproduction of recorded media and furniture.

Meanwhile, 11 had negative growth rates in January, namely transport equipment; other nonmetallic mineral products; basic metals; other manufacturing and repair and installation of machinery and equipment; textiles; wood, bamboo, cane, rattan articles and related products; rubber and plastic products; machinery and equipment except electrical; leather and related products including footwear and basic pharmaceutical products and pharmaceutical preparations.

Oikonomia Advisory and Research Inc. president and chief economist John Paolo Rivera said the demand for manufactured goods increased given decelerating inflation.

“This (manufacturing output) growth can continue in the succeeding months as long as inflation is managed and within targets and as supply chain constraints are mitigated,” he said.

Based on responding establishments, the PSA said the average capacity utilization rate for manufacturing in January was reported at 74.5 percent, up slightly from 74.4 percent in the previous month.

“Almost all industry divisions reported capacity utilization rates of more than 60 percent during the month, except the manufacture of basic pharmaceutical products and pharmaceutical preparations (55 percent),” the PSA said.

Industry divisions with the highest reported capacity utilization rate in January were furniture (88.7 percent), transport equipment (86 percent) and rubber and plastic products (82.4 percent).

Of the total responding establishments, 26.7 percent operated at full capacity (90 percent to 100 percent).

Meanwhile, 37.6 percent operated at 70 to 89 percent capacity and 35.7 percent were running below 70 percent capacity.