Factory output improved in November amid economic reopening

MANILA, Philippines — Factory output continued to expand in November amid economic reopening as recovery comes into full view.

What’s new

Results of the Philippine Statistics Authority’s monthly survey of selected industries revealed the volume of production index (VoPI), a measure of manufacturing output, expanded 25.3% year-on-year in November, slightly faster compared with 25.2% growth recorded in October. 

This was the eight consecutive month that VoPI grew, as authorities eased quarantine curbs in Metro Manila and other areas, allowing for more economic activity a month before the peak of the holiday season.

Why this matters

Economic managers look to manufacturing output as a barometer of economic welfare as it can be an indicator of demand situation in the country, where consumer spending is a major growth driver. When factories produce more, it could be a product of stronger consumer demand.

In the past months, VoPI posted triple-digit growth rates which economists attributed to "base effects". This means that because the pandemic sank the economy to historic-lows last year and crippled factory production, small gains from easing lockdowns would translate to stronger readings this year. 

What analysts say

Miguel Chanco, senior economist at Pantheon Macroeconomics, said "it’s far too soon to say if the sudden eruption of the Omicron wave in the Philippines will delay the recovery."

"We maintain that the longer-term outlook remains fragile, though, especially once catch-up growth is exhausted," Chanco said in a commentary.

Other figures

• Twelve industries drove growth during the month top-billed by the manufacture of coke and refined petroleum product, which soared 84.8% year-on-year in November.
• On the one hand, 10 industries slumped that month, led by a major contraction of the tobacco product manufacture at -20.4% year-on-year.
• A quarter of factories were operating at full capacity this month, amounting to a capacity utilization which barely moved of 67.4% from 67.2% in November.