Philippine factory output growth fastest in over 4 years

Factory output grew at its fastest pace in more than four years in August, driven by stronger production of electronics, transport equipment and basic metals, the Philippine Statistics Authority (PSA) said.

Preliminary results of the PSA’s latest Monthly Integrated Survey of Selected Industries showed factory output, as measured by the volume of production index (VoPI), rose by 11.8% year on year in August.

This accelerated from the revised 6.7% growth in July and the 1.3% expansion in August 2025.

It was also the fastest growth rate in more than four years or since the 346% expansion in March 2022.

Adjusting for seasonal factors, VoPI rose by 2.9% month on month in August from the 2.3% contraction in July.

In the first eight months, factory output grew by 7.1% from a year earlier.

The PSA attributed the faster August growth mainly to increased production of computer, electronic and optical products, transport equipment, and basic metals.

Manufacturing of computer, electronic and optical products increased by 32.1% year on year in August, faster than 9.2% in July.

Transport equipment production picked up by 11.4% in August from 2.1% in July, while basic metals output expanded by 29% from 17.4% previously.

“Of the remaining 19 industry divisions, 15 posted annual increases in August 2026. Meanwhile, four 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 growth were computer, electronic and optical products; coke and refined petroleum products; and basic metals.

Average capacity utilization, or the extent to which industry resources are used in producing goods, stood at 78.7% in August, slightly lower than 78.8% in July but higher than 77.6% a year earlier.

“Perhaps, the key takeaway is that August was a particularly strong month for industrial production, led heavily by electronics,” Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, said via Facebook Messenger.

“That is encouraging for the country’s export-oriented manufacturing base, although the concentration of the acceleration in a few industries means we should be cautious about extrapolating the 11.8% rate.”

The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) also rose to 54.9 in August from 51.8 in July, its highest level in nearly 10 years, marking the fourth straight month of improving manufacturing conditions.

A reading above 50 indicates an improvement in manufacturing conditions, while anything below signals deterioration.

However, Mr. Peña-Reyes said he expects manufacturing growth to moderate significantly in the next few months, pointing to the PMI’s fall to 49.6 in September.

“The September PMI’s fall to 49.6 from 54.9 is a meaningful warning signal. It was the first contraction in five months, with output declining for the first time in nine months, while weaker new orders, falling export orders, and stronger international competition weighed on factories,” he said.

Mr. Peña-Reyes said the September PMI reading points to “softer orders and production momentum going forward.”

“The most likely near-term scenario is continuing year-on-year manufacturing growth but at a substantially slower pace than the exceptionally strong August reading, assuming the September weakness persists,” he said.

“Electronics remains a major bright spot, but weak demand and export competition are emerging risks that could make the exceptionally strong August production numbers difficult to sustain,” he added, — Justine Irish D. Tabile, Senior Reporter