The Philippine economy saw a slight easing in factory output growth in May, according to preliminary results from the Philippine Statistics Authority's Monthly Integrated Survey of Selected Industries.
The volume of production index (VoPI), a measure of manufacturing activity, grew by 10.2% year on year in May, a slowdown from the revised 11.7% expansion in April.
This was the weakest reading since February's 3.5% output, although it matched March's 10.2% growth. The S&P Global Philippines Manufacturing Purchasing Managers' Index (PMI) improved to 50.8 in May from 48.3 in April.
PMIs are a key indicator of future manufacturing activity, as they reflect raw-material orders placed for processing into manufactured goods a few months down the line. A reading above 50 signals expansion, while a reading below 50 indicates deterioration.
The manufacturing sector expanded 6% year on year in the first five months, according to the Philippine Statistics Authority. Experts say that while output growth cooled slightly in May, the sector remains healthy.
Analysts point out that the easing growth rate is a normalization after a strong April, rather than the beginning of a slowdown. Underlying trends remain positive, with the sector still growing at a double-digit pace.
The Philippine Statistics Authority attributed the easing growth primarily to weaker output of transport equipment, food products, and chemicals. Output of chemicals and chemical products contracted by 14.8% in May, while transport equipment manufacture declined 1.4% year on year.
However, other industry segments showed strong growth, with coke and refined petroleum products expanding 73.3% in May, and computer, electronic and optical products growing 15.8%.
Capacity utilization averaged 78.8% in May, an increase from the 77.1% posted a year earlier and 78.5% in April. Experts expect manufacturing to continue benefiting from strong domestic demand, lower interest rates, and a gradual improvement in external demand.
However, they also caution that global trade and geopolitical risks remain potential obstacles to growth. The manufacturing PMI edged up to 50.9 in June, reflecting sustained growth in output and new orders.
