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The Philippine manufacturing sector bounced back in April, reversing the deterioration in operating conditions in March, according to S&P Global
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Both output and new orders reported hikes in April, with the respective rates of growth sharp and historically strong
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On the negative side, confidence took a hit last month, as the country’s goods producers indicated a notably less optimistic outlook
The Philippine manufacturing sector bounced back in April, reversing the deterioration in operating conditions in March, according to S&P Global.
The headline S&P Global Philippines Manufacturing PMI (purchasing managers’ index) – a composite single-figure indicator of manufacturing performance – posted 53.0 in April, signaling a renewed improvement in the health of the Filipino manufacturing sector. This was up from March’s reading of 49.4, which was the lowest for 43 months and indicated a modest deterioration in operating conditions.
READ: PH manufacturing contracts in March, ending 18-month growth streak
Maryam Baluch, economist at S&P Global Market Intelligence, said: “The Filipino manufacturing sector commenced the second quarter of the year on a solid note, experiencing renewed growth in output and new orders, alongside an increased level of purchasing activity. Encouragingly, inflationary pressures also remained contained and
historically subdued.
“However, companies have shown caution in expanding their workforce numbers, maintaining staffing levels for the second consecutive month. Furthermore, confidence
within the sector has declined to its second-lowest in the series history. Some respondents indicated that the rise in activity during April was partially influenced by the upcoming elections, suggesting that post-election, customer demand may be less buoyant.”
Global demand for goods produced by the country’s manufacturing sector remained broadly stagnant for a second consecutive month in April.
The seasonally adjusted New Export Orders Index was unchanged from the previous month, printing just below the neutral 50.0 mark.
Higher output needs led manufacturers to raise their buying activity at an accelerated pace in April. Growth has now been recorded in each of the last 17 months, with the latest uptick solid overall.
Also, it was noted that increased purchasing activity, including instances of bulk buying, allowed manufacturers to build their inventories of inputs. Stocks were accumulated for a second consecutive month, with the rate of growth rising slightly.
Holdings of finished goods also rose in April. However, the fourth consecutive monthly increase in post-production inventories was the weakest in the current growth sequence and only fractional overall, said the S&P report.
Employment stayed unchanged for a second straight month during April. PMI data showed that firms managed their workloads effectively, as seen by another fractional drop in outstanding work levels.
Turning to prices, inflationary pressures were only modest.
Cost burdens and output charges continued to rise, but at historically subdued paces, with the latter registering only a slight increase as a competitive environment led some firms to absorb their costs.
Finally, while firms remained hopeful that output will rise over the next 12 months, the level of confidence slumped to the second-lowest on record, only ahead of the survey-low observed at the onset of the pandemic in March 2020.
It was noted that the temporary boost from the upcoming mid-term elections would wane, leading to a return to normal production levels.
