Factory output growth slows in April as supply chain issues persist

MANILA, Philippines — Festering global supply chain issues hurt local manufacturing output in April, with fading base effects showing a clearer picture of the impact.

What’s new

Results of PSA's monthly survey of selected industries revealed the volume of production index (VoPI), a measure of manufacturing output, rose at a slower rate of 3.4% year-on-year in April, markedly slower compared to the 352.3% expansion recorded in March.

This was the 11th straight month that VoPI expanded.

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 churn more finished products, this could be a sign of strong consumer demand. When demand is robust, manufacturers tend to hire more workers to avoid backlogs which, in turn, generates employment for the country.

What an analyst says

Leonardo Lanzona, an economist at Ateneo De Manila University, was not surprised with the latest figure.

"This is part of the recession that experts have been indicating. Since the economy has already attained some measure of growth, the so-called base effects are no longer found. It is crucial for the government to take a more active role in the economy," Lanzona said.

"While much of this can be attributed to external factors, the failure of the government to undertake an effective stimulus program even during the pandemic is now taking a toll on our economy," he added.

Other figures

• Fourteen industries grew in April, led by the manufacture of textiles which rose at a pace of 45.6% year-on-year.
• Eight industries led by the manufacture of electrical equipment saw output wither in the same month.
• More than one-fifth of factories were operating at full capacity as average capacity utilization slowed to 69.2% from 70.9% in April.