Production output in manufacturing declined to a three-month low in June, influenced by reductions in the output of fundamental metals alongside coke and refined petroleum products, according to a report by the Philippine Statistics Authority (PSA).<\/p>\n
Initial findings from the PSA\u2019s recent Monthly Integrated Survey of Selected Industries (MISSI) indicated that factory production, quantified by the volume of production index, diminished by 2.2% year-on-year in June.<\/p>\n
The June figure was a deceleration from the adjusted 3.4% in May and the 3.8% in June of the previous year. It also marked the slowest progression in three months or since the 0.8% decrease recorded in March.<\/p>\n
Over the first half of the year, the average growth rate for factory output was 1.4%, slower than the 2% average for the same timeframe last year.<\/p>\n
On a monthly comparison, output in June contracted by 4.7%, a shift from the 2.6% observed in May. When excluding seasonal influences, it declined by 2.5%.<\/p>\n
The PSA attributed the slowdown in factory output in June to significant annual declines in basic metals (-23.2% in June compared to -12.5% in May), coke and refined petroleum products (-12% as opposed to -6.1%), and chemicals and chemical products (-14.7% down from -9.9%).<\/p>\n
Five additional sectors recorded decreases while the remaining 14 experienced growth.<\/p>\n
The top three industry sectors that contributed to the overall year-on-year increment in the VoPI were food products (26.3% up from 15.5%), transport equipment (13% down from 14.8%), and computer, electronic, and optical products (4.8% down from 5%), as stated by the PSA.<\/p>\n
In contrast, the Philippines in the S&P Global Manufacturing Purchasing Managers\u2019 Index (PMI) grew to 50.7 in June, up from 50.1 in May, reflecting the most robust pace in two months.<\/p>\n
PMIs serve as a leading indicator for manufacturing activities, indicating the volume of materials procured in anticipation of production weeks or months ahead. A figure above 50 delineates growth from contraction.<\/p>\n
The slowdown in factory output, particularly the deceleration observed in three sectors, can be linked to rising costs of imported materials due to global trade uncertainties and a depreciated peso, remarked Cid L. Terosa, senior economist at the University of Asia and the Pacific.<\/p>\n
\u201cThough muted and slower than in preceding months, demand for domestically produced goods seems to have been maintained amid lower inflation,\u201d Mr. Terosa noted in an email.<\/p>\n
Philippine Chamber of Commerce and Industry Chairman Sergio R. Ortiz-Luis Jr. stated that \u201cmany exporters and manufacturers moderately slowed from May to June before announcing the (tariff) due to concerns about potential expansion.\u201d<\/p>\n
\u201cYear on year, we saw a certain increase; however, it was influenced by Trump\u2019s tariff,\u201d he commented in a phone interview incorporating both Filipino and English.<\/p>\n
In April, US President Donald J. Trump declared a 17% reciprocal tariff rate on goods from the Philippines, although its implementation was postponed until July.<\/p>\n
Earlier in July, he elevated this tax to 20%. Following his meeting with Philippine President Ferdinand R. Marcos Jr., Mr. Trump instituted a new 19% tariff on Philippine products, effective from August 7.<\/p>\n
\u201cTariffs could result in a drop in manufactured exports. Electronics and semiconductor exports, which account for over 50% of our total exports to the US market, are likely to remain less affected as electronics are supported by WTO (World Trade Organization) Information Technology agreements,\u201d Mr. Terosa said.<\/p>\n
According to Nicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co., manufacturing confronts obstacles owing to Trump\u2019s 19% tariff imposed on the nation.<\/p>\n
\u201cAn additional concern is the recently disclosed potential 100% tariff on electronics entering the US, which may suppress demand for electronic exports from the Philippines,\u201d he remarked in a Viber message.<\/p>\n
Marites M. Tiongco, dean at De La Salle University School of Economics, emphasized that the nation should diversify export markets to \u201cmitigate the risk related to US market concentration.\u201d<\/p>\n
Looking ahead, Mr. Terosa highlighted the implications of US reciprocal tariffs, a weakened peso, and ongoing geopolitical tensions as emerging threats that could hinder the country\u2019s manufacturing sector.<\/p>\n