PH manufacturing modest growth posted in Feb

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  • The Philippine manufacturing sector posted modest growth in February 2024 supported by a strong rise in new orders
  • The Philippines’ Purchasing Managers’ Index rose from 50.9 in January to 51.0 in February, according to the latest survey of S&P Global
  • The latest improvement in the health of the Filipino manufacturing sector was modest overall and marked a sixth consecutive month of expansion
  • The upturn in production, however, slowed to near-stagnation and was the weakest noted in one- and-a-half years

The Philippine manufacturing sector posted modest growth in February 2024 supported by a strong rise in new orders.

The Philippines’ Purchasing Managers’ Index (PMI)–a composite indicator of manufacturing performance–rose from 50.9 in January to 51.0 in February, according to the latest survey of S&P Global.

The latest improvement in the health of the Philippine manufacturing sector was modest overall and marked a sixth consecutive month of expansion.

“The start of the year was somewhat subdued for Filipino manufacturers, amid muted demand. However, in February, growth in new orders gained momentum, which in turn supported a fresh rise in employment and sustained growth in purchasing activity,” S&P Global Market Intelligence economist Maryam Baluch said in a statement.

New orders rose further as underlying demand conditions improved last month, with the rate of growth quickening from January, S&P Global noted.

Additionally, the upturn in new factory orders was also supported by a renewed rise in export sales. While the rate of expansion in new export orders was fractional overall, it marked the first month since last November where foreign demand for Filipino manufactured goods improved.

Stronger demand conditions, meanwhile, supported firms in their efforts to raise buying activity and employment. February data signaled the first month since last October where workforce numbers were raised. Moreover, while the rate of job creation was modest overall, it was the sharpest in 16 months.

The upturn in production, meanwhile, slowed to near-stagnation and was the weakest noted in one-and-a-half years.

An insufficient supply of raw materials was cited as a major hindrance for some firms. The imbalance between growing demand and insufficient output to complete sales also put a strain on inventories. Companies often utilized stocks to meet production requirements.

February data also highlighted fresh falls across both pre- and post-production inventories. Moreover, the latter was depleted at the strongest rate since January 2022.

Pressures on supply chains persisted, as average lead times for inputs lengthened for the fourth consecutive month in February. Raw material shortages were highlighted as a common factor behind delays, as well as poor weather conditions.

Despite remaining historically subdued, rates of both input price and output charge inflation crept up last month. Higher material costs and rising supplier prices were said to have underpinned the latest rise in cost burdens, which in turn led to increased charges as firms sought to pass on hikes in input prices to consumers. Concerns surrounding material shortages also seeped into expectations.

S&P Global said the year ahead outlook for production weakened notably during the latest survey period.

The level of positive sentiment observed in February matched that seen last October and was the joint-lowest in 20 months.