The Philippine manufacturing output demonstrated a noteworthy growth of 4% year-on-year in January 2024, marking a significant acceleration from a modest 0.4% increase recorded in December 2023. This upswing is predominantly attributed to robust advancements in food production, as confirmed by data released by the government on Saturday. The Value of Production Index (VaPI) exhibited a commendable rebound following a 1.4% contraction noted in the same month of the previous year.
Notably, food manufacturing soared by 9.3% in January 2024, a substantial rise compared to the mere 1.4% increase observed in December 2023. Food production played a critical role, constituting 31.5% of the broader manufacturing trend. Additionally, growth in the machinery and equipment sector—excluding electrical components—and chemicals contributed positively to the overall increase in manufacturing output. Despite this promising start to the year, the momentum for the manufacturing sector appeared to wane in February.
The S&P Global Philippines Manufacturing Purchasing Managers' Index (PMI) declined to 51.0 in February from 52.3 in January, indicating the slowest expansion recorded in the past 11 months. This decline can be attributed to softer demand and reduced output, which placed downward pressure on the index. Furthermore, external factors impacted the sector as Glencore announced a suspension of operations at its Pasar smelter located in the Philippines.
This development underscores the ongoing challenges within the copper sector, especially as Chinese smelters increasingly dominate the global refining market. Currently, China controls approximately half of the world's copper smelting capacity, further complicating the landscape for local producers..