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Philippine manufacturing saw a surge in growth in September, as robust expansion in new orders drove a matching uptick in production volumes
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The headline Philippine Manufacturing Purchasing Managers’ Index rose from 51.2 in August to 53.7 in September, the highest since mid-2022
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Overall new orders increased at a much faster pace, despite demand for Filipino goods dropping notably in international markets
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Expectations for the year-ahead outlook for output brightened in September, with confidence of manufacturers the highest since May
Philippine manufacturing saw a surge in growth in September, as robust expansion in new orders drove a matching uptick in production volumes.
The headline Philippine Manufacturing Purchasing Managers’ Index – a composite single-figure indicator of manufacturing performance – improved from 51.2 in August to 53.7 in September, the highest since mid-2022, according to the latest survey of S&P Global.
This indicates a solid improvement in the health of the Philippine manufacturing sector, which has now posted growth (above the 50.0 neutral mark) in each month since September 2023, S&P Global noted.
“Overall new orders increased at a much faster pace, despite demand for Filipino goods dropping notably in international markets. Consequently, manufacturers boosted production at a strong rate,” S&P Global Market Intelligence economist Maryam Baluch said.
S&P Global said anecdotal evidence pointed to improving underlying demand trends, new client wins, and the successful launch of new products.
That said, S&P Global noted that Filipino goods did not fare well internationally.
A second consecutive monthly decline in new export orders was recorded in September, with the latest downturn the most severe in over four years. Nonetheless, the overall rise in new orders meant that firms were able to raise both their hiring and purchasing activities.
A fresh round of job creation was also registered in September. The rate of employment growth, though modest, was the strongest since March.
Nonetheless, growing levels of new work fed through to a rise in backlogs of work in September, thereby marking a first month of accumulation since May 2023. The rate at which purchasing activity was raised also picked up during September and hit a 20-month high.
While some of the purchases were used directly for production requirements, firms also expanded their inventories in anticipation of sales in the coming months and to protect themselves from predicted supply- chain disruptions.
The increase in pre-production inventories in September was only modest, however.
Moreover, the decline in vendor performance was the most pronounced since December 2022.
Inflationary pressures also intensified in September, with firms attributing this to higher supplier prices and weather events. The rate of input price inflation ticked up to a seven-month high. However, the rate of charge inflation was broadly in line with that seen in August, and signaled only a modest uptick in selling prices. Moreover, in both cases, the rates of increase remained historically subdued.
Finally, expectations for the year-ahead outlook for output brightened during September, with confidence at manufacturers the highest since May. Firms anticipate that demand trends will continue to improve, and thus should support further growth in production.
