FACTORY output grew faster in May compared to the previous months’ as inflation rate decelerated since February this year, data from the Philippine Statistics Authority showed Friday.
The PSA’s Monthly Integrated Survey of Selected Industries indicated that the volume of production index posted a year-on-year increase of 8.1 percent in May, faster than 7.7 percent in April. VoPI recorded an annual drop of -0.6 percent in May 2022.
Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said the easing trend in inflation and the reopening of the economy such as the recovery of tourism and other sectors, would help sustain further gains in manufacturing, especially if interest rates start to go down eventually.
“The further growth in manufacturing [was] due to easing prices/inflation that also reduced the production costs of manufacturers,” Ricafort said.
Inflation, which peaked at 8.7 percent in January 2023, eased to 8.6 percent in February, 7.6 percent in March, 6.6 percent in April, 6.1 percent in May and 5.4 percent in June.
“The expansion in the annual growth of VoPI in May 2023 was mainly contributed by the annual upturn in manufacture of electrical equipment with 53.7 percent during the period from 19.2 percent in April 2023. The manufacture of electrical equipment shared 27.3 percent to the annual acceleration of VoPI of the manufacturing sector in May 2023,” the PSA said.
Other primary contributors to the year-on-year uptrend of VoPI were the slower annual decline noted in manufacture of chemical and chemical products at -21.2 percent during the period from -32.2 percent in the previous month, and the annual increase in manufacture of beverages at 3.9 percent in May from -0.5 percent decline in April.
The PSA said of the remaining 19 industry divisions, nine exhibited annual increases in May, while 10 industry divisions recorded annual decrements. The highest annual decline was noted in the manufacture of furniture at -31.3 percent.
Meanwhile, the value of production index for manufacturing posted an annual increase of 10.3 percent in May, faster than 10.1 percent in April and 6.6 percent a year ago.
“The annual upturn in the VaPI in May 2023 was mainly contributed by the faster annual increase in the manufacture of electrical equipment industry division at 54.2 percent in May 2023 from 19.5 percent in the previous month,” the PSA said.
It said the manufacture of electrical equipment contributed 26.7 percent to the uptrend of VaPI in May 2023. It said of the 22 industry divisions, the manufacture of electrical equipment has 11th highest weight in the computation of VaPI.
Other main contributors to the higher year-on-year growth of VaPI were the slower annual decreases in the manufacture of chemical and chemical products at -23.5 percent in May from -33.3 percent in the previous month; and manufacture of computer, electronic and optical products with an annual decline of -7.1 percent in May 2023 from -9.4 percent annual drop in the previous month.
The PSA said of the remaining 19 industry divisions, 12 exhibited annual increases while seven industry divisions registered annual decreases during the month.