Domestic consumption, export frontloading seen as growth drivers
The Philippines’ manufacturing output expanded by 4.9 percent in May, which analysts said showed higher momentum from year-earlier and month-earlier growth rates as fueled by domestic consumption and some frontloading of exports ahead of an expected increase in US tariffs.
The Philippine Statistics Authority (PSA)’s latest Monthly Integrated Survey of Selected Industries released on Tuesday showed factory output in May 2025 grew at a higher rate versus April’s 4.3 percent and May 2024’s 4.2 percent.
In the year-to-date, the volume of production index (VPI) inched up by 1.8 percent.
VPI measures the average change over time of the manufacturing section’s volume of production relative to a base period.
Election spending, export frontloading
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the improvement in the local manufacturing data was largely brought about by midterm election-related spending and some frontloading of Philippine export demand ahead of possible increases in US import tariffs.
“Geopolitical risks could potentially lead to higher volatility in global crude oil and other commodity prices that could lead to some pickup in inflation and could also slow down global economic growth and, in turn, could potentially slow down local economic growth, including some local manufacturing activities,” Ricafort said.
Resilient economy
Reinielle Matt Erece, economist at Oikonomia Advisory & Research Inc., said positive production growth in manufacturing is partly driven by a resilient domestic economy.
“Food items and transport equipment were the primary drivers for the sector. A resilient domestic economy, which is driven by strong consumption figures, increases the demand for products and can offset the decline in international trade brought by trade tensions,” Erece said.
John Paolo Rivera, a senior research fellow at the Philippine Institute for Development Studies, said the manufacturing sector benefited from easing input costs, better logistics and resilient demand for food, beverage and construction-related goods.
“The positive PMI (purchasing managers index) readings also signaled improved business confidence,” Rivera said.
VaPI and utilization rate
The Value of Production Index for the manufacturing section rose 4.5 percent in May from year-on-year increases of 4.3 percent in April 2025 and 3.3 percent in May 2024, the PSA said.
Since January 2025, the VaPI, which measures the average change over time of the production value of the manufacturing section, increased by 2.3 percent.
Based on responding establishments, the average capacity utilization rate for the manufacturing section in May 2025 rose to 76.9 percent from the 76.7 percent average capacity utilization rate in April.
In May 2024, the average capacity utilization rate was recorded at 75.2 percent.
