By Aubrey Rose A. Inosante, A reporter
PHILIPPINE production expanded to 14th month in a row in October, but the pace of growth slowed month-on-month amid a mild rise in new orders and outflows, S&P Global said Monday.
At the same time, manufacturing firms increased hiring, with job creation reaching an 88-month high.
The S&P Global Philippine Manufacturing Purchasing Managers’ Index (PMI) stood at 52.9 in October, down from a 27-month high of 53.7 in September. This was the second fastest reading since January 2023.
A PMI reading above 50 indicates an improvement in business conditions, while a reading below 50 indicates a deterioration.
“The October PMI data showed a slow – but strong – growth in the entire manufacturing sector of the Philippines. The expansion of new orders was also strong, allowing the goods manufacturers to increase their production again,” said Maryam Baluch, economist at S&P. Global Market Intelligence report.
The Philippines’ PMI – a one-number composite index of manufacturing performance – has posted readings above 50 every month since September 2023.
The Philippines entered the highest PMI reading among the five countries of the Association of Southeast Asian Nations (ASEAN) in October, followed by Vietnam (51.2) and Thailand (50).
Meanwhile, Malaysia (49.5), Indonesia (49.2), and Myanmar (48.4) recorded contractions in October.
The Philippine PMI was also above the region’s reading of 50.5, unchanged from September, S&P Global said.
The PMI index measures manufacturing conditions based on a weighted average of five indices. It includes new orders (30%), output (25%), employment (20%), supplier delivery times (15%) and purchase stocks (10%).
S&P Global said the Philippines’ PMI data showed a “continued and solid” improvement in manufacturing activity in October.
Despite the decrease, new orders increased to 15th month in a row, while output was extended for the seventh straight month.
“Recent increases have exceeded their chain averages, driven by increased customer demand that has strengthened demand trends,” he said.
Strong demand allowed manufacturing firms to significantly increase stafflevels in October.
“Manufacturers in the Philippines have increased hiring, as the latest wave of job openings marked the largest increase since mid-2017,” he said.
With more, more productive workers firms have been able to cope with a slight accumulation of backlogs and keep pace with current production needs.
At the same time, the improvement in demand allowed companies to increase purchasing activity, but at a slower pace than last month.
“Firms say high prices of raw materials often deter firms from buying inputs,” S&P Global said.
This prompted firms to use their existing inventory on orders, with pre-production inventories falling for the first time since February. Stocks of finished goods decreased for the third month in a row, and by the sharpest rate since January 2022.
Supply chains continued to be stretched in October, with shortages of raw materials due to congestion at ports.
“Firms have highlighted the challenges they are facing on the supply side, with shortages leading to long delivery times, and a sluggish procurement process. “It is also one of the important factors in the increase in the price of inputs, which was also fueled by the depreciation of the peso against the dollar,” said Ms. Baluch.
S&P Global noted that the rate of increase in input prices rose to an eight-month high in October.
The peso closed at P58.10 per dollar on Oct. 31, weakened from a close of P56.03 on September 30.
Manufacturing firms are optimistic that current demand trends will continue over the next 12 months.
“Nonetheless, firms remain optimistic as more than half of the respondents expect an increase in the coming year,” said Ms. Baluch.
‘A STRONG PLACE’
“The Philippines is the only bright spot in terms of recent developments, although its September pop of 53.7 fell to 52.9 last month and the impact of this strong gain will not be felt regionally due to the country’s low productivity. sector,” Pantheon Macroeconomics said in an emailed statement.
In the ASEAN region, Pantheon said the result was “softer than we expected” as the manufacturing sector recovered from the storm.
“PMI levels have improved significantly over the past two months which could be attributed to the pent up demand released by deflation.fcurrency rates like lowering interest rates,” Leonardo A. Lanzona, professor of economics at Ateneo de Manila University said. BusinessWorld via Facebook Messenger.
He noted that companies often increase production in the months before the holidays in anticipation of strong demand.
“As the manufacturing base expands and the Christmas season ends at the end of the year, expect the PMI growth rate to be much lower,” said Mr. That’s it.
However, he noted supply-side issues, including skills shortages and poor adaptation to new technologies, continue to plague the manufacturing sector.
“Production may continue to grow given the increase in domestic demand during the holiday season and foreign demand such as free tradedevelopment is more effective,” John Paolo R. Rivera, president, and chief economist at Oikonomia Advisory & Research, Inc. BusinessWorld via Viber message.
At that time, Ma. Teresita Jocson-Agoncillo, executive director of the Confederation of Wearable Exporters of the Philippines, said the production of wearables has been slow since the end of September.
“We’re on average — 3% to 5% growth over the same period last year. Recent wage increases in all major regions – Regions 3, 4A and B, Region 7, and NCR – have had an impact on orders for Spring-Summer 2025. These orders are directed to ASEAN countries which are very competitive,” he said. BusinessWorld in a Viber message.
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