MANUFACTURING output slowed down in May, the Philippine Statistics Authority (PSA) reported on Tuesday, with both volume and value growth registering declines.

Data showed that the Value of Production Index (VaPI) declined by 2.2 percent and the Volume of Production Index (VoPI) went down by 3.2 percent.

Both indices dropped from a month earlier, with significant growth of 5.7 percent and 6.3 percent, respectively. The figures are also lower than the 8.5-percent and 6.1-percent increases recorded in May last year.

The slower increase in VaPI, the PSA said, was due to deceleration in the annual growth rate of the manufacture of computer, electronic and optical products industry division, which grew 1.6 percent from 9.4 percent in the previous month.

Year-to-date, however, VaPI remained negative at 0.1 percent, while VoPI remained positive with growth 0.9 percent.

"The manufacture of computer, electronic and optical products contributed 18 percent to the downtrend of VaPI for the manufacturing section in May 2024," the PSA said.

It was also the second highest weight among 22 industry divisions in the computation of the VaPI, it added.

Twelve out of 19 industries declined during the month while seven posted annual increases, the PSA data showed.

The manufacture of coke and refined petroleum products posted the highest annual increment of 50.9 percent during the period.

As for the VoPI, May's slow increase was also due to the slower upward trend in the manufacture of fabricated metal products, except machinery and equipment, which registered 13.4 percent from a double-digit increase of 29.9 percent.

Twelve of the remaining 19 divisions also posted a decline, while seven increased.

Average capacity utilization, meanwhile, went slightly up to 75.5 percent from 75.3 percent in April.

"All industry divisions reported capacity utilization rates of more than 60.0 percent during the month," the PSA said.

More than a quarter — 28.1 percent or 159 of the 566 establishments that participated in the PSA — said they operated at full capacity, defined as 90 to 100 percent.

Meanwhile, 42.4 percent (240 firms) said they operated at 70- to 89-percent capacity, while 29.4 percent (167 firms) reported operating below 70 percent.

Commenting on the results, Pantheon Macroeconomics economist Miguel Chanco mentioned that while they anticipated a significant drop, the actual outcome was still weaker than expected.

This result, he added, partially reflects the substantial reversal of favorable base effects that had previously driven the headline into negative territory in the last report.

"The 'growth' seen in April was never going to last, considering the abysmal trends at the margin," Chanco said. "Base effects will again push the year-on-year rate into the black for the June report, but this should also be short-lived, given the weakness in momentum."

"Private consumption growth overall will remain under pressure from weak household balance sheets and high interest rates, while remittances are still not rising fast enough to provide any meaningful support, even if accounting for the recent lift in local currency terms, due to peso depreciation," he added.