Factory output rebounds in March despite war-driven shocks
Factory output expanded at its fastest pace in more than two years in March, signaling resilience in the Philippines’ manufacturing sector despite the ongoing war in the Middle East that began in late February.
The Philippine Statistics Authority’s (PSA) latest Monthly Integrated Survey of Selected Industries (MISSI), released on Wednesday, May 6, showed that the volume of production index (VoPI), a proxy for factory output, grew 7.8 percent year-on-year in March, faster than the 3.1-percent growth last February and reversing the 0.6-percent contraction a year ago.
The March reading marked the strongest growth since the 9.5 percent recorded in September 2023, based on historical PSA OpenSTAT data seen by Manila Bulletin.
Driving the expansion in factory output were key manufacturing sub-sectors, led by basic metals, computer, electronic, and optical products, as well as transport equipment, which were the top contributors to overall VoPI growth during the month.
The acceleration was also supported by an easing contraction in the manufacture of coke and refined petroleum products, which posted a slower annual decline of 4.4 percent last March from a steeper 19.5-percent drop in February.
In value terms, the value of production index (VaPI) grew at a faster pace of 10.5 percent in March from 4.5 percent a month ago and 0.1 percent a year ago.
This was the fastest VaPI growth since the 10.7 percent in April 2023, OpenSTAT data showed.
PSA attributed the stronger VaPI performance mainly to the turnaround in the manufacture of coke and refined petroleum products, which contributed 41.1 percent to overall growth after rebounding to a four-percent increase from a 16.6-percent decline a month ago.
Other key contributors to VaPI growth included the manufacture of computer, electronic, and optical products, as well as basic metals, which posted double-digit increases last March.
On the demand side, the volume of net sales index (VoNSI) rose by 1.8 percent in March, an improvement from the 0.5-percent growth last February, indicating a modest pickup in factory demand.
The increase in VoNSI was largely driven by a strong rebound in the manufacture of coke and refined petroleum products, which surged by 37.4 percent after contracting in the previous month.
Meanwhile, the value of net sales index (VaNSI) expanded by 4.3 percent last March, accelerating from 1.9 percent a month ago, supported by higher selling prices and improved sales across major manufacturing segments.
PSA said the growth in VaNSI was also led by the petroleum products segment, which posted a 49.5-percent increase and accounted for the bulk of the index’s acceleration.
Capacity utilization also improved during the month, with the average rate rising to 78.5 percent from 77.6 percent in February and 76.4 percent a year ago, indicating that more factories operated closer to full capacity.
More than one-third, or 34.8 percent, of manufacturing establishments operated at full capacity, while 40.8 percent ran at 70- to 89-percent utilization levels in March.