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The Philippine manufacturing sector sustained growth in its operating conditions in November 2022, stemming from greater demand that resulted in quicker expansions in production levels and factory orders
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The Philippines’ Global Purchasing Managers’ Index (PMI) went up fractionally to 52.7 in November from 52.6 in October, signaling modest growth
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The latest PMI is also still above the neutral 50.0 threshold for the 10th month running, indicating an improvement in the health of the manufacturing sector
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Elevated price pressures coupled with supply-chain issues, the peso weakening against the dollar pose an ongoing threat
The Philippine manufacturing sector posted modest growth in November 2022, stemming from greater demand that resulted in quicker expansions in production levels and factory orders.
The Philippines’ Purchasing Managers’ Index (PMI) went up fractionally to 52.7 in November from 52.6 in October, according to S&P Global.
The latest PMI is also still above the neutral 50.0 threshold for the 10th month running, indicating an improvement in the health of the manufacturing sector.
Demand conditions remained strong midway through the fourth quarter, as Filipino manufacturing output and factory orders grew for the third consecutive month. Moreover, the rates of increase recorded were the fastest since June, S&P Global said.
It noted that the latest upturns were strong in context of historical data. That said, export conditions remained weak during November, thereby extending the current sequence of contraction in new export orders observed since March. Weak foreign client demand weighed on total new order growth across the sector which was primarily driven by domestic demand.
Nonetheless, the downturn in export sales softened from October’s recent low.
Firms increased their purchases of inputs for the third month running in November, to support growth in overall sales and in anticipation of higher orders in the coming months.
Moreover, the rate of expansion quickened from October to the fastest in six months, and signaled a solid increase overall.
S&P Global economist Maryam Baluch said, however, that while the manufacturing sector has shown strong gains during 2022, elevated price pressures pose an ongoing threat.
She added: “Coupled with supply-chain issues, the peso weakening against the dollar adds further fragility. To curb inflation rates, Bangko Sentral ng Pilipinas raised interest rates by 75 base points during November. As the manufacturing sector has heavily relied on demand to help boost growth, the rise in rates, with the prospect of further potential monetary tightening, could impact customer spending.”
Supply-chain pressures continued to persist during November. While the incidence of delays was at three-month low, port congestion and material shortages meant that vendor performance deteriorated strongly.
Looking ahead, business expectations remained strongly optimistic as nearly two-thirds of survey panelists were hopeful of growth in output in the coming 12-months.
Moreover, the degree of confidence strengthened on the month. This was often linked to greater client activity, the economy opening up and more firms undertaking new projects.
