Factory output grows in January

MANUFACTURING OUTPUT climbed to six-month high in January as heavily weighted food products rebounded, the Philippine Statistics Authority (PSA) reported on Friday.

Preliminary data from the PSA showed that industrial production, as measured by the volume of production index (VoPI), rose by 3.2% year on year in January, a turnaround from the 0.3% fall in the same month last year. It also picked up from the 0.4% increase in December.

The January print marked the second straight month of manufacturing expansion. It was the quickest growth in six months or since the 7.4% expansion in July last year.

Month on month, manufacturing’s VoPI grew by 1.8%, a turnaround from the 1.8% drop in December. Stripping out seasonality factors, output slowly eased by 1.5% compared to the 4% growth of the previous month.

In comparison, the Philippines in S&P Global Manufacturing Purchasing Managers’ Index (PMI) dipped to 52.3 in January from 54.3 in December, the weakest since the 51.2 recorded in August 2024.

A PMI reading above 50 shows improvement in operating conditions, while a reading below 50 shows the opposite.

The PSA attributed January’s growth to the performance of food products (9.4% from -0.3% in December), machinery and equipment except electrical (62.1% from 40.9%), and electrical equipment (45.6% from 18.2%).

In a phone interview, Philippine Chamber of Commerce and Industry (PCCI) Honorary Chairman Sergio R. Ortiz-Luis, Jr. attributed that the VoPI decline of items such as computers, electronics and optical products as partly seasonal, what wasn’t seasonal was the negative performance of food products in December.

Food products account for the largest weight in VoPI at 18.7%.

“The VoPI’s robust growth can be attributed to the rate cuts enacted by BSP (Bangko Sentral ng Pilipinas) in the previous year which allowed these manufacturing companies to expand,” Rischelle Alysha T. Legaspi an economist from Oikonomia Advisory & Research, Inc., said in an e-mail response.

The central bank lowered borrowing costs by a total of 75 basis points (bps) last year to 5.75%. The BSP left its policy settings untouched last month and reiterated that it is still in easing mode, signaling a possibility of at least 50-bp cut this year.

“The context of the election year typically indicates high optimism within the manufacturing industry. This could boost not only employment but also production.” Ms. Legaspi said.

The average capacity utilization rate for the manufacturing section in January was reported at 75.9%, slightly higher than 75.6% from the previous month.

Nineteen out of 22 industry divisions posted at least 80% capacity utilization rates. — John Phoebus G. Villanueva