MANUFACTURING OUTPUT climbed to a two-month high in July, propelled by higher production of beverages, petroleum, and food products, the Philippine Statistics Authority reported on Thursday.
Preliminary results of the Monthly Integrated Survey of Selected Industries showed factory output, as measured by the volume of production index (VoPI), rose by 5.7% year on year in July. This was higher than the revised 3.4% in June and 3.6% in July last year.
July marked the 13th month of annual VoPI growth.
The 5.7% expansion was the fastest in two months or since 7.1% in May.
On a monthly basis, July’s VoPI grew by 3.8% from June’s revised 2.9% contraction. Adjusting for seasonality factors, manufacturing output increased month on month by 3%, a turnaround from the 2.1% decline in June.
Year to date, factory output rose by 5.2% in the January-to-July period, lower than the 23.9% growth a year ago.
In a statement, the PSA attributed the July uptick in VoPI to faster growth in three industry divisions: beverages (up by 12.6% from -11.4% in June), coke and refined petroleum products (up by 36.2% from 15.9%), and food products (up by 1.2% from -3.1%).
The VoPI growth mirrors the improvement seen in the S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) in July. The Philippines’ PMI reading rose to 51.9 in July from the 11-month low of 50.9 in June. A PMI score above 50 signals an expansion in factory activity.
PSA data showed the capacity utilization rate in July slightly improved to 73.5% from 73.3% in June and the 71.4% rate for July 2022. All 22 sectors averaged higher than the minimum 50% capacity utilization rate for July.
The increase in factory output in July may have been driven by the continued economic growth.
“The increase in economic activity is developing demand for power and transportation. Hence the increased production of coal and fuel… As for beverages, I would attribute it to the economy being a consumer-driven economy,” Peter Lee U, dean of the University of Asia and the Pacific’s School of Economics, said in a phone interview.
He said the manufacturing sector may still grow this year, although a global economic slowdown and elevated inflation may weigh on overall demand. — A.C.Abestano