Philippine manufacturers revved up production to its fastest growth pace in January, reflecting demand-driven growth and giving a positive view of the economy’s direction in the first quarter of this year, the Philippine Institute for Supply Management (PISM) said in a recent report.
The January Purchasing Managers Index (PMI) for manufacturing swelled 4.95 points to 54.99 from 50.04 in December last year, reversing a steep downtrend since the slide in November triggered by supertyphoon Haiyan (local name Yolanda).
In November last year, the manufacturing index slid 4.10 points to 54.61 as a result of Haiyan’s havoc in the Visayas.
“PMI Manufacturing has been above the growth threshold from January 2013 to January 2014. Businesses are expecting faster expansion in February 2014,” the PISM said in its just released quarterly report.
An index above 50 indicates economic expansion, and below 50 indicates contraction.
January’s PMI recorded the fastest expansion for the December-January period since 2008, when the institute started collating and analyzing manufacturing data, the PISM said.
Compared with a year earlier, the composite PMI Manufacturing for January recorded a hefty increase of 3.23 points.
Vis-à-vis December 2013, the index saw a huge increase of 4.95 points in January 2014.
“The upturn was demand-driven and provides a positive and encouraging signal for the economy moving forward into the first quarter of 2014. Traditionally a steady month for PMI, the PMI manufacturing index in January posted the highest difference over the previous month since PMI started in July 2008,” the report said.
The index’s advance reasserted the growth momentum of the economy beginning in January this year, the institute said. All indices were up from January last year with supplier deliveries posting the highest difference, the PISM said.
The PISM’s key tracking variables showed all indices were in faster expansion mode from a low of 50.83 (for employment) to a high of 58.20 (new orders).
Production gained 8.26 points and inventories surged 12.84 points, posting the biggest changes which suggest the manufacturing companies are preparing for more business activity in the coming months.
To gauge the industry’s overall performance, 183 purchasing/supply managers were asked about how their companies performed in January compared to the previous month.
Some 50% said conditions remained the same, 37% believed conditions improved, while 12% said their companies experienced a decline in business activity.
The Manufacturing Index of PMI Philippines started in July 2008. It is now on its 67th month as a reliable and timely forecasting tool.
There are 32 countries conducting and using the PMI as an economic indicator based on movements in the manufacturing sector using data on new orders, production, employment, supplier deliveries, and inventories.
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