Philippine Factory Output Surges, Achieving Five-Month High in February

Philippine manufacturing experienced a notable surge in February, marking the highest output growth in five months, largely fueled by a significant increase in demand for locally produced goods. According to the Philippine Statistics Authority (PSA), the volume of production index (VoPI) expanded by 8.9% year-on-year in February, an uptick from the 6.2% growth observed in January and the most substantial since September of the previous year.

The robust expansion was led by the food products sector, which alone saw a growth of 9.2%, making it the most significant contributor to February’s increased VoPI. This surge aligns with findings from S&P Global, which noted that the Philippines’ Purchasing Managers’ Index (PMI) improved to 51 in February from 50.9 in January, indicating a rebound in demand that had been subdued at the start of the year.

Despite the positive trends, challenges persist in the sector. S&P Global highlighted issues such as material shortages, which have hampered production capabilities, leading to near-stagnation levels and the fastest depletion of inventories since January 2022. This ongoing struggle with supply chain disruptions has impacted the ability of factories to meet orders efficiently.

Additionally, while there was a marginal rise in export sales in February, marking the first improvement since November of the previous year, the PMI reading for March suggested that these production issues might continue to affect the sector’s performance. According to advance estimates by S&P Global, local factory output contracted for the first time since July 2022, and the growth in new orders moderated.

Overall, the first two months of 2024 have seen an average VoPI growth of 7.5%, a significant improvement over the 2.6% expansion recorded in the same period last year, demonstrating resilience amidst ongoing industry challenges.