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Philippine manufacturing operations saw modest growth stemming from increased demand in October 2022
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The S&P Global Philippine Purchasing Managers’ Index was at 52.6 in October, three basis points down from September but still above the neutral 50.0 threshold
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Filipino manufacturers still faced supply-side constraints, the latest extension to delivery times being the greatest since January
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Firms’ confidence underpinned by hopes of continued demand uptick in the coming year
Philippine manufacturing operations registered modest growth in October 2022 as demand picked up, but the advance slightly lagged September’s gain.
The S&P Global Philippine Purchasing Managers’ Index (PMI) was at 52.6 in October, down from 52.9 in September, according to the latest survey of New York-based financial and information analytics company S&P Global. The latest PMI is still above the neutral 50.0 threshold.
While the headline index signaled a slightly softer improvement in the health of the manufacturing sector, the reading posted above the historical average and was modest overall.
“The latest PMI data revealed yet another round of expansion across the Filipino manufacturing sector. Demand conditions continued to improve, resulting in a further rise in output and new business placed at good producers,” S&P Global economist Maryam Baluch said in a statement.
Improved demand drove up both production and new order levels for the second month running, S&P Global said.
While overall factory orders increased, contraction of work volumes from abroad was at its sharpest since the recent sequence of declines began in March.
Growth in new sales resulted in businesses expanding their workforce and input-buying activity to increase capacity to support production. Employment rose for the sixth consecutive month, while buying activity registered a second successive month of expansion.
That said, both segment saw softer upturns during the latest survey period.
Supply-side constraints, however, continued to hamper the Filipino manufacturing sector. Vendor performance deteriorated sharply in October. The latest extension to delivery times was the greatest since January. According to anecdotal evidence, bad weather and port congestion led to shipping delays.
Favorable demand conditions, alongside an ongoing strain from supply-chain pressures, increased work outstanding during October. While the rate of accumulation was only fractional, it marked the second successive month of expansion in work backlog.
On the price front, both average cost burdens and charges levied continued to rise sharply during the latest survey period. Moreover, the pace of input price inflation regained momentum after easing to a 20-month low in September amid reports of higher energy and material costs and an unfavorable exchange rate.
Despite input costs increasing at a quicker rate, firms raised their charges at a slightly slower pace. The respective seasonally adjusted index fell for the second month in a row, to signal the softest uptick in output charges since February.
While an improvement in operating conditions across the manufacturing sector was reported during October, the latest Future Output Index reading was off the recent high in September.
Nevertheless, output expectations for the next 12 months remained optimistic with nearly 60% of the survey panelists upbeat on the outlook for production. Their confidence was underpinned by hopes of continued upticks in demand over the coming year.
