Factory output growth quickens in February on looser curbs

MANILA, Philippines — Local manufacturing output bounced back in February as restrictions relaxed then, the Philippine Statistics Authority reported on Thursday.

What’s new

Results of PSA's monthly survey of selected industries revealed the volume of production index (VoPI), a measure of manufacturing output, surged 84.3% year-on-year in February, faster compared to the 17.1% expansion recorded in January.

This was the ninth straight month that VoPI rose as restrictions around Metro Manila and other areas eased following a steady decline of infections from the Omicron variant.

Why this matters

Economic managers look to manufacturing output as a barometer of economic welfare as it can be an indicator of demand situation in the country, where consumer spending is a major growth driver.

When factories churn more finished products, this could be a sign of strong consumer demand. When demand is robust, manufacturers tend to hire more workers to avoid backlogs which, in turn, generates employment for the country.

What analysts say

But Michael Enriquez, chief investment officer at Sun Life Investment Management and Trust Corp., warned of lingering supply chain disruptions that hurt factory production around the world.

“We still don’t see any evidence that the global supply chain bottlenecks have been improving. For one, China is still grappling with their Zero Covid policy. The Russsia-Ukraine conflict has even worsened the supply of certain commodities,” he said.

Other figures

• Nineteen industries grew in February, led by the manufacture of coke and refined petroleum products which expanded at a pace of 748.9% year-on-year.
• Three industries led by the manufacture of electrical equipment saw output wither in the same month.
• One-fifth of factories were operating at full capacity as average capacity utilization improved to 69% from 68.3% in January.