EconomyEditor's PickFactory output expands for 5th month in a row in November

January 6, 2023
REUTERS

Factory output grew for the fifth consecutive month in November as productivity in the manufacturing sector increased, data from the Philippine Statistics Authority (PSA) showed.

Preliminary results from PSA’s Monthly Integrated Survey of Selected Industries (MISSI) reported that factory output, as measured by the volume of production index (VoPI), expanded 5.9% year-on-year in November. This was faster than the previous month’s revised 5.3% but slower than the 28.6% growth in November 2021.

November marked the fastest growth in five months after the revised 0.02% dip recorded in June.

Sergio R. Ortiz-Luis, Jr., Philippine Exporters Confederation, Inc. (Philexport) president, said there was better manufacturing performance in November as the economy continued to reopen and companies have hired more workers.

“There’s still a lot of problems in the supply chain. But those already operating and expanding, going to their usual 100% operation, surely production will increase,” Mr. Ortiz-Luis said in a phone interview on Friday.

In a separate briefing for labor force data on Friday, National Statistician Claire Dennis S. Mapa said employment in the manufacturing sector increased during the month, as reflected in the MISSI data.

“Manufacturing sector had the second highest increase in employment month-on-month with 668,000 new workers [in November],” Mr. Mapa said in Filipino at the press briefing.

“And we can see that there will be a continuous increase in employment [in manufacturing and trade] up until the first month of 2023. But we shall see as for wholesale and retail trade, there are seasonal factors that could affect employment,” he added.

Year to date, factory output growth averaged 16.2%, slowing from the 57.3% average growth in the same period in 2021.

In the report, the PSA said the November figure was mainly driven by positive growth recorded in 15 out of 22 industry divisions. This was led by machinery and equipment except electrical, which grew 68.5% year on year in November, slower than the 79.1% in October but faster than 40.7% in November 2021.

Fabricated metal products, except machinery and equipment likewise jumped by 46.2% in November, from 45.9% in October, while chemical and chemical products’ growth eased to 29.4% from 39.9%.

Meanwhile, seven industry divisions contracted on an annual basis in November. Electrical equipment recorded the largest drop at 54.5% (from -56.8% in October), which was a reversal from the 45.1% growth in November 2021.

“I think seasonal domestic demand has been the push for manufacturing output in the fourth quarter of 2022, and this signals more economic activity from the manufacturing sector. More economic activity means more jobs and incomes,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail interview.

The MISSI data mirrored the higher reading seen in the S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI). In November, the Philippines logged a PMI reading of 52.7, a tad higher than 52.6 in October. A reading above 50 marks improvement for the manufacturing sector while anything below indicates deterioration.

Mr. Ortiz-Luis said manufacturing may continue to see slower growth this year.

“Unfortunately, unlike with other countries, services are stronger compared to manufacturing in the Philippines. It’s not as fast as we would like manufacturing to be. There are still a lot of policies and a lot of adjustments to be made to encourage the manufacturing sector. But it’s a good sign that it’s increasing, though I think the growth should be faster than the services industry,” Mr. Ortiz-Luis said.

Mr. Asuncion said better factory output numbers are expected in December.

“[China’s reopening] may provide more volatility in supply chains and higher pressure on input prices, especially for manufactured goods using imported inputs,” Mr. Asuncion added.

Average capacity utilization was penciled at 72.5% in November, inching up from October’s 72.4%. Of the 22 product categories, 21 reported at least 60% utilization rates. — Ana Olivia A. Tirona

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