Philippine Factory Output Surges 10.1% in June Driven by Refined Petroleum, Food, Transport Equipment

FACTORY OUTPUT growth accelerated to 10.1% in June, driven by stronger production of refined petroleum, food products and transport equipment, the Philippine Statistics Authority (PSA) said. However, analysts said sustaining double-digit growth might be difficult amid weaker global demand, higher US tariffs, geopolitical tensions, foreign exchange rate volatility, and elevated input and energy costs. Citing preliminary results of the Monthly Integrated Survey of Selected Industries, the PSA said the volume of production index (VoPI) outstripped the revised 9.1% growth in May and the revised 2.3% expansion a year earlier. The June reading was also the strongest in over four years or since the 346% expansion recorded in March 2022. Adjusting for seasonality, VoPI growth accelerated to 1.6%, from 0.7% in the previous month. In the first half, factory output grew 5.7% from a year earlier. The PSA attributed the stronger June reading to coke and refined petroleum products, food products, and transport equipment. The manufacture of coke and refined petroleum products grew 84.5% year on year in June, against the 73.3% posted in May. Food manufacturing picked up 3.9% year on year from the little-changed 0.02% growth in May, while transport equipment production expanded 4.9%, against a 0.5% contraction previously. “Of the remaining 19 industry divisions, 12 posted annual increases in June 2026. Meanwhile, seven industry divisions exhibited annual decreases in their VoPI for manufacturing during the period,” the PSA said. It added that the industries that contributed the most to the overall 10.1% annual growth were coke and refined petroleum products; computer, electronic and optical products; and basic metals. Average capacity utilization, or the extent to which industry resources are used in producing goods, stood at 78.9% in June, unchanged from May but higher than the 76.8% posted a year earlier. Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said growth is likely driven by resilient domestic demand, continued recovery in electronics and export-oriented industries, improved supply chain conditions, and sustained business activity. “It suggests that the sector is gradually broadening its recovery, although performance still varies across industries,” he added. For the coming months, he expects manufacturing output to continue growing moderately as base effects normalize. “Continued support from exports, infrastructure activity, and easing inflation should help sustain production,” he said. “Downside risks remain including weaker global demand, higher US tariffs, geopolitical tensions, forex rate volatility, and elevated input and energy costs,” he added. Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said he is cautiously optimistic about output growth in the coming months. “The manufacturing sector is finally showing signs of a more durable recovery, but sustaining double-digit growth will depend on both strong local demand and a stable global environment,” he said. The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) came in at 50.9 in June, signaling a modest improvement in manufacturing conditions. A reading above 50 marks improvement for the manufacturing sector while anything below indicates deterioration. The PMI is a leading indicator for future manufacturing activity, reflecting the raw materials ordered for future processing into manufactured goods. — Justine Irish D. Tabile