-
The Philippine manufacturing sector in September recorded its fastest expansion in three months, with output and new orders returning to growth
-
The S&P Global Philippines Purchasing Managers’ Index rose to 52.9 in September from 51.2 in August, the fastest advance in three months
-
Shipping delays and port congestion were largely blamed for the deterioration in vendor performance
The Philippine manufacturing sector in September recorded its fastest expansion in three months, with output and new orders returning to growth.
The S&P Global Philippines Purchasing Managers’ Index was at 52.9 in September, up from 51.2 in August, according to the latest survey of S&P Global.
The seasonally adjusted headline figure stayed above the neutral 50.0 threshold for the eighth month running, indicating further improvement in the health of the Philippine manufacturing sector. Moreover, while the rate of increase was modest overall, it was the fastest in three months and was quicker than the series average of 51.8.
“Growth across the Filipino manufacturing sector quickened in September, according to the latest PMI data. Firms noted that an increase in customer demand allowed production levels and factory orders to grow for the first time since June,” S&P Global economist Maryam Baluch said in a flash report.
S&P Global said the rates of increase for outputs and new orders were only moderate, but a welcome change from the preceding two survey periods. According to anecdotal evidence, greater client appetite helped boost factory orders, with manufacturers then scaling up production, the company said.
Though Filipino manufacturers saw inflows of new business increase in September, foreign demand for Filipino manufactured goods weakened. This extended the current run of foreign demand contraction to seven months, suggesting that growth was primarily driven by domestic demand.
In line with the greater output, firms purchased additional inputs for their production process.
Moreover, with companies anticipating greater demand, holdings of both pre- and post-production stocks increased. The upturns for both quickened from those seen in August.
In line with greater new sales across the manufacturing sector, companies continued to add to their payroll numbers. Their workforce numbers increased the second-fastest rate in the current five-month sequence of increase.
As has been the case since August 2019, vendor performance deteriorated again in September. Moreover, the extent to which average lead times lengthened was the greatest in six months and sharp overall. Shipping delays and port congestion were largely blamed for the deterioration.
As a result of improved demand conditions and persistent supply-chain pressures, Filipino goods producers reported their first increase in work outstanding since February 2016.
Turning to prices, inflationary pressures eased in September. The rate of input price inflation fell to a 20-month low and charges levied increased at a softer rate than those seen in August. That said, the pace of charge inflation was still historically elevated with companies choosing to pass costs on to customers.
Though supply chain disruptions hindered production, an improvement in demand conditions helped keep expectations upbeat in September. Moreover, the 12-month outlook for output was strongly positive and the degree of optimism at its highest since August 2018.
