By Isa Jane D. Acabal, Researcher
Factory output expanded at the fastest pace in four years in April due to base results, firmer refining activity, and production that was front-loaded amid ongoing conflicts in the Middle East, analysts said.
Preliminary results of the Philippine Statistics Authority’s Monthly Integrated Survey of Selected Industries showed manufacturing output, as measured by the volume of production index (VoPI), grew 12% year-on-year in April.
This was a change from a revised decline of 2.4% in April 2025 and more than a revised expansion of 10.2% in March.
April’s reading was the fastest pace in four years or since the 346% increase recorded in March 2022.
In the four months to April, factory output growth reached 6.8%, compared to a 0.8% decline in the same period last year.
“April’s 12% expansion in factory production was driven primarily by a combination of underlying results and some industry strength, particularly in coke and colicified petroleum products, which benefited from higher refining activity amid higher oil prices and supply uncertainties related to the country’s tensions,” the Union Bank of the Philippine Economist said in an email.
He said inventory restructuring and front-loading production are also supporting factory output growth “as firms move to secure supply and lock in output ahead of rising input costs.”
John Paolo R. Rivera, senior researcher at the Philippine Institute for Development Studies, also says that the rapid growth in April “is due to the increase in the production of petroleum-related products amid high demand for fuel, and continued recovery in selected manufacturing sectors.”
“Some companies may have front-loaded production due to supply chain and geopolitical uncertainty,” he added in a Viber message.
Meanwhile, Cid L. Terosa, an associate professor of economics at the University of Asia and the Pacific, said the increase in factory production in April can be traced to the high demand for high-quality and refined petroleum products as firms ramp up production ahead of the opening of classes in June.
“Higher refineries should have run filters to increase production and increase processing,” he said in an email.
On a monthly basis, April’s output fell by 0.7%, which is the result of growth of 8.7% in March. Excluding seasonal factors, it grew by 5.8%.
In comparison, the S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) contracted to 48.3 in April, from 51.3 in March.
The PMI is a leading indicator of factory activity, showing the volume of raw materials purchased ahead of production activity weeks or months down the line. A reading above 50 indicates expansion, while a reading below 50 indicates deterioration.
PSA pointed out that the acceleration in factory output growth saw a rapid annual increase in production of coke and refined petroleum products to 52.7% in April from a 7.4% decline last year and a 3.4% decline in March.
Sergio R. Ortiz-Luis, Jr., honorary chairman and treasurer of the Philippine Chamber of Commerce and Industry, said by phone “because of [Middle East] critical situation, we needed to import more oil, and we need to refine it.”
Of the remaining 21 sectors, 14 posted an increase, while seven industries declined.
According to the PSA, the top three categories of industries that contributed to the year-on-year growth of the manufacturing VoPI were coke and refined petroleum products, computer, electronic and optical products (14.1% in April from 18.1% in March), and food products (8.2% from 7.1%).
Analysts said the rate cut and inflation had a limited impact on April output due to a slowdown in policy transmission.
Inflation in April rose to a three-year high of 7.2%. The central bank also raised the key policy rate by 25 basis points to 4.5% in April.
“Instead, high inflation – especially from energy costs – may actually encourage firms to speed up production before additional costs increase. Although high oil prices raise input costs for many producers, at the same time they increase production in petroleum-related industries, which drove the overall increase,” said Mr. Asuncion.
Mr. Rivera said firms generally increased production costs but may not have been fully operational during the month “as manufacturers were still responding to demand conditions and inventory requirements.”
“The impact is likely to be more visible in the coming months,” he added.
Capacity utilization, or the rate at which industry resources are used to produce goods, averaged 78.4% in April, higher than the revised 76.5% for the same month in 2025. However, this was lower than the revised 78.6% entered in March.
Due to the delayed effects of price cuts, Mr. Terosa said manufacturing production is likely to face headwinds moving forward.
Mr. Rivera expects production growth to remain positive in the coming months.
“(Production) may moderate as inflation, higher borrowing costs, and global uncertainty weigh on demand and investment. Key risks are oil prices, foreign demand, and supply chain disruptions,” he said.
At that time, Mr. Asuncion said the reading for April does not indicate a continued acceleration although it is “encouraging.”
“Strength is concentrated in sectors that are linked to energy and are boosted by short-term factors, including primary effects and pre-loaded activity. Going forward, we expect more modest but still positive productivity growth, with policy tightening and inflation rising gradually,” he added.
