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The Philippine manufacturing sector continued to strengthen in November 2021 as demand expanded for the first time in eight months
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The Philippine Purchasing Managers’ Index rose marginally to 51.7 in November from 51.0 in October
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Higher client numbers, increased footfall, and a general improvement in customer demand were the key drivers of growth
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Traffic issues, port congestion and difficulties in sourcing materials weighed on vendor performance
The Philippine manufacturing sector continued to strengthen in November 2021 as demand expanded for the first time in eight months, while output neared stability.
The Philippine Purchasing Managers’ Index (PMI) rose marginally to 51.7 in November 2021 from 51.0 in October 2021, registering above the 50.0 no-change threshold that separates expansion from contraction.
Although only modest, the latest uptick was the strongest in eight months and in line with the long-run series average, according to the latest survey of London-based IHS Markit.
“Latest PMI data continued to signal a recovery in operating conditions in the Philippines with the headline figure at an eight-month high. Supporting this was an expansion in new orders, which was the first uptick since the end of the opening quarter of the year. Output meanwhile fell at the softest pace in eight months and inched closer towards stability during November,” IHS Markit economist Shreeya Patel said.
Higher client numbers, increased footfall, and a general improvement in customer demand were the key drivers of growth, according to survey panelists.
At the same time though, manufacturers recorded an eighth monthly decline in production, albeit one that was only fractional.
While stronger sales helped some businesses to expand their output, others mentioned delays receiving inputs, as well as material and staff shortages constrained capacity.
Traffic issues, port congestions and difficulties in sourcing materials influenced another deterioration in vendor performance during November. The extent to which lead times lengthened was marked but eased during the month.
Meanwhile, workforce numbers continued to fall, though only modestly and at the softest pace for four months.
With new orders expanding marginally in November, companies raised their buying activity for the second month running.
Expectations that demand will continue to improve encouraged firms to add to their input stock levels, which they did so at the strongest rate since February.
On the price front, input costs rose during penultimate month of the year, extending the current period of inflation to 19 months. The rate of increase quickened to the sharpest since March 2018 and was among the steepest in almost six years of data collection.
Panel comments often linked the surge to higher raw material, transportation and energy costs. Selling charges also rose, and at a quicker pace as firms sought to passthrough higher expenses.
Looking ahead, firms remained confident that output will improve over the course of the year. IHS Markit said the degree of optimism improved to a 21-month high with hopes of a return to normality and greater demand underpinning the outlook.
That said, although sentiment was higher than the average for 2021 so far, it was below the long-run series average, suggesting concerns regarding the pandemic still persist, IHS Markit noted.
