PH factory activity posts Sept rebound

Philippine Tribune
Philippine Tribune

DOMESTIC manufacturing conditions improved in September with a key indicator signaling a renewed expansion, S&P Global Market Intelligence said on Monday.

S&P Global’s Philippine purchasing managers’ index (PMI) increased to 50.6 for the month, up from 49.7 in August.

PMI readings above 50 point to growth while those below indicate a contraction. The August reading marked the first decline for the Philippines in two years.

“Growth stemmed from a fresh increase in new orders, which also supported an accelerated rise in production,” S&P Global said in a report.

“With demand gearing up and business requirements rising, firms also raised their staffing levels for the first time in four months,” it added.

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S&P Global still described the pace of growth as “only marginal overall,” and economist Maryam Baluch said the latest data “remained historically subdued, thus suggesting some weakness still present within the sector.”

“Despite increasing material, fuel and supplier costs exerting pressure on operating expenses and pushing up selling prices at a faster pace, both input prices and output charges rose at historically muted rates,” she noted.

Global challenges such as weak foreign demand, Baluch continued, affected September’s overall growth, with firms expressing increasing worries about the sustainability of future demand.

Following a decline in August, S&P Global reported a slight increase in new orders for September, supported by improved demand and new client acquisitions, marking the first rise in a year.

It said that increased factory orders due to domestic demand led to a growth in total new business and a faster expansion in production compared to August’s 12-month low.

S&P Global noted that increased business demands prompted Philippine manufacturers to hire more employees, reversing a three-month trend of job cuts, though the rate of job creation was still relatively low.

Work backlogs declined for the third consecutive month in September, the largest decrease in seven months and indicating that there was still unused capacity in the sector.

Inventory levels, meanwhile, saw mixed trends.

Finished goods stocks increased due to expectations of higher future demand while pre-production inventories fell as companies used existing stocks to meet current demand, depleting these at the fastest rate in almost three years.

The decline in purchased stock came as purchasing activity stagnated, ending a growth trend that began in September 2022.

Higher input costs led to firms raising selling prices, although inflation for both was relatively mild compared to historical levels.

Despite the PMI rebound, Philippine manufacturers’ confidence slipped to a 15-month low given concerns about sustained demand.

Still, 40 percent of respondents expect output to grow in the coming year.

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