Local factory output softens in February as inflation woes remain

MANILA, Philippines — Local factory output softened in February since goods manufacturing plunged as headwinds top-billed by inflation woes that showed little signs of easing. 

Data provided by the Philippine Statistics Authority on Tuesday showed the volume of production index (VoPI), a measure of manufacturing output, grew 7.2% year-on-year in February. This was slower compared to the 11.2% annual expansion recorded in the preceding month and the 69.8% growth in the same period last year.

Still, this was the 21st straight month of expansion.

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 started slowly in January, despite the sheen of base effects felt in 2022 and the economy’s full reopening. 

The PSA explained that the decline in VoPI was due to the slowing manufacture of food products, which softened to 6.4% in February from the 14% recorded in the preceding month. Declining output from this sector accounted for a third of the downtrend observed in February.

Broken down, 12 industries expanded in February. Other manufacturing and repair and installation of machinery and equipment led the pack as it expanded 34% year-on-year in February.

Ten industries shrank in the month, spearheaded by the manufacture of worn apparel. — Ramon Royandoyan