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The Philippine manufacturing output slid into contraction in March, the first since 2022 amid material shortages
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The headline Philippines’ Purchasing Managers’ Index remained broadly unchanged from 51.0 in February to 50.9 in March
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Output fell for the first time in 20 months in March
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Material shortages hampered capacity
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Confidence levels slip to near four-year low
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Looking at the year ahead, manufacturers across the Philippines maintained an optimistic outlook for output
The Philippine manufacturing output slid into contraction in March, the first since July 2022 amid material shortages.
The headline Global Philippines’ Purchasing Managers’ Index (PMI)–a composite single-figure indicator of manufacturing performance–remained broadly unchanged from 51.0 in February to 50.9 in March, according to the latest survey of S&P Global.
READ: PH manufacturing modest growth posted in Feb
The latest reading marked a seventh consecutive monthly improvement in operating conditions across the Philippine manufacturing sector, albeit one which was modest overall, S&P Global noted, as growth in new orders remained historically subdued.
Central to the latest improvement across the sector was a further expansion in new orders received in March. The rate of growth moderated on the month and was the second-weakest in the current seven-month sequence of expansion.
After broadly stalling in the previous survey period, however, output fell for the first time in 20 months in March. While some firms noted softer demand conditions, others commented that material shortages hampered capacity, as evidenced by the lengthening of supplier lead times.
Rising new work fed through to hiring activity, with job creation noted for the second straight month. Moreover, the rate of growth was the strongest recorded in one-and-a-half years.
Additionally, growth in new orders also supported a fourth consecutive monthly rise in buying activity during the latest survey period. Although only marginal, the rate of growth quickened on the month.
Following a month of destocking, firms were also keen to rebuild inventory levels. The quarter ended with fresh and stronger expansions in holdings of both pre- and post-production inventories.
In terms of prices, March data revealed a loss of momentum in cost pressures. Though firms cited that prices for raw materials continued to rise as a result of El Niño and material shortages, some noted that suppliers had moderated hikes in their charges in a bid to drive sales. As a result, cost burdens rose at the weakest pace since October 2020.
Furthermore, Filipino goods producers reduced their selling prices for the first time in nearly four years, albeit only fractionally.
Looking at the year ahead, manufacturers maintained an optimistic outlook for output.
“Sentiment among manufacturers weakened and was the least optimistic in nearly four years,” S&P Global Market Intelligence economist Maryam Baluch said.
“Firms were concerned that increased market competition would limit growth prospects. However, hopes of demand conditions domestically and globally strengthening continued to buoy confidence levels,” she added.
