Philippine factory output in May bucks global slowdown

MANILA, Philippines — Local factory output improved in May as Philippine manufacturers carved some headspace amid a global economic slowdown.

Data provided by the Philippine Statistics Authority on Friday showed the volume of production index (VoPI), a measure of manufacturing output, expanded by 8.1% year-on-year in May. This was slightly faster compared to the 7.7% outturn recorded in the preceding month and reversed the 0.6% contraction recorded a year ago.

As it is, the manufacturing sector saw its fortunes rise as the Philippine economy reopened for business early in the second quarter. Its climb proved slow since external headwinds, such as supply chain disruptions, hampered its ascent. 

Economic managers use manufacturing output as a gauge of economic welfare. This indicator measures the demand of consumers and businesses in the country, where consumption is king.

When demand proves firm, manufacturers tend to hire more workers to keep production churning. Manufacturing churned slowly in January, amid the sheen of base effects felt in 2022 and the economy’s full reopening.

The PSA explained that the expansion in May came on the back of electrical equipment manufacturing, posting a 53.7% growth during the month. This was faster compared to the 19.2% growth recorded in April.

Domini Velasquez, chief economist at China Banking Corp. observed the uptrend in May was likely due in part to declining material costs and improving global supply chains.

“However, underlying demand conditions, especially in foreign markets remain weak. This could somewhat be offset by resilient domestic demand,” she said.

The global economy is not moving as fast as experts projected this year. Inflation is still a headache for many economies, with some countries in Europe sliding into a technical recession. 

Higher interest rates everywhere, meant to tame inflation, dampened growth and production across some economies.

Even the benefits of China’s rebound proved increasingly hollow as 2023 wore on, considering its factories are not churning products up to par. This was the case, as Velasquez noted.

“Indicators in major importing countries point to weaker manufacturing sectors across regions as consumers shift demand from goods to services this post-pandemic,” she added.

That said, data broken down showed 11 industries expanded in May. 

Ten industries contracted in the same month, led by the manufacture of furniture which was pared 31.3% on-year in May. — Ramon Royandoyan

Source: https://www.philstar.com/business/2023/07/07/2279375/philippine-factory-output-may-bucks-global-slowdown