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The Philippine manufacturing sector eased slightly in October compared to September
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The headline Philippines Manufacturing Purchasing Managers’ Index fell to 52.9 in October from September’s 27-month high of 53.7
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The October result was still the second-highest reading since January 2023
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Growth in new orders and output slowed this month although expansions were recorded for the 14th and seventh consecutive months, respectively
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Filipino goods producers ramped up hiring, with the recent wave of job creation marking the most significant increase since mid-2017
The Philippine manufacturing sector eased slightly in October from September.
The headline Philippines Manufacturing Purchasing Managers’ Index (PMI) fell to 52.9 in October from September’s 27-month high of 53.7, but the October result was still the second-highest read since January 2023, and indicated a historically solid improvement in the sector.
The October PMI was also the 14th straight month of improvement in the manufacturing sector, according to the latest survey of S&P Global.
“October PMI data indicated a slight easing in – but still solid – growth across the Filipino manufacturing sector. The expansion in new orders was again robust, allowing goods producers to raise their output again. More encouragingly, employment became the real stand-out this month, with the rate of job creation the strongest in over seven years,” S&P Global Market Intelligence economist Maryam Baluch said.
“However, firms revealed supply-side challenges, with material shortages resulting in longer delivery times, and cooling buying activity. It was also one of the key factors for rising input prices, which was further exacerbated by the depreciation of the peso against the dollar. Nonetheless, firms remain optimistic with more than half of respondents anticipating expansion in the year ahead,” she added.
Growth in new orders and output slowed but expansions were recorded for the 14th and seventh consecutive months, respectively.
The recent increases outpaced their series averages, driven by a growing customer base that strengthened underlying demand trends, S&P Global noted.
Purchasing activity was up, but at a rate that was notably weaker than seen in September.
Firms stated that higher prices of raw materials often dissuaded them from purchasing inputs.
Amid ongoing growth in new orders, the significant cooling of buying activity led firms to rely on their inventories to meet order demands. Pre-production inventories were reduced for the first time since February, and to the greatest extent in just over a year.
Additionally, holdings of finished goods were depleted for the third consecutive month. The rate of reduction was sharp and the most pronounced since January 2022. S&P Global said this shift in inventory management indicated a changing perspective among manufacturers, who have traditionally favored maintaining greater stock levels.
Supply chains remained stretched in October, with vendor performance worsening to the second-greatest degree since December 2022, following a more pronounced drop in September.
Raw material shortages were again a key issue, with port congestion cited by PMI survey panelists.
Improved demand trends allowed firms to expand their workforce numbers strongly. Filipino goods producers ramped up hiring, with the recent wave of job creation marking the most significant increase since mid-2017.
Additionally, growth in employment allowed firms to work through the slight build-up of backlogs seen in the previous month and also keep up with current production requirements, as outstanding business declined in October.
Material shortages and the peso’s depreciation against the U.S. dollar led to higher input costs.
Companies also reported higher expenses for labor and logistics.
The rate of input price inflation ticked up to an eight-month high, with charges raised to the greatest extent since May in response.
Manufacturers hoped that current demand trends will be sustained in the coming 12 months, thus allowing for production growth. The level of confidence improved to a five-month high in October, with around half of survey panelists expressing optimism for the year ahead.
READ: PH manufacturing surges in September, highest in 2 years
