Factory output grew faster in April as the continued slowdown in inflation triggered more production activities.
Latest data from the Philippine Statistics Authority showed that the value of production index in April rose 10.7 percent, faster than 6.0 percent in March and 5 percent a year ago.
The volume of production index grew by 8.2 percent in April, faster than the annual increase of 3.4 percent in March. In April 2022, VoPI recorded an annual drop of -1.3 percent.
“The faster annual growth of the VaPI in April 2023 was mainly contributed by the higher annual upturn in the manufacture of food products industry division at 19.7 percent in April 2023 from 10.0 percent in the previous month,” the PSA said in a statement posted on its website Thursday.
The manufacture of food products contributed 38.2 percent to the uptrend of VaPI for the manufacturing sector in April.
Michael Ricafort, the chief economist of Rizal Commercial Banking Corp., said in a report that manufacturing exhibited better numbers in April partly due to lower prices or the easing inflation trend “amid the decline in most of the major global commodity prices such as crude oil, natural gas, coal and industrial metals and other inputs of local manufacturers.”
“Thus, lower prices of these inputs encouraged increased production/manufacturing activities,” Ricafort said.
Data showed that from a peak of 8.7 percent in January 2023, inflation eased to 8.6 percent in February, 7.6 percent in March, 6.6 percent in April and 6.1 percent in May.
Ricafort said the downward correction in long-term interest rates helped reduce the long-term borrowing costs of manufacturers, encouraging more borrowings to finance new investments and expansion plans.
He said the further reopening of the economy towards greater normalcy led to more production sales, incomes and employment of some local manufacturers.
“Increased government spending also supported the growth of some local manufacturers that are part of the supply chain of the various infrastructure projects,” Ricafort said.