By means of Aubrey Rose A. Inosante, Reporter
PHILIPPINE production expanded by 14e month in a row in October, but the pace of growth slowed month over month due to a softer increase in new orders and production, S&P Global said on Monday.
At the same time, manufacturing companies ramped up workforces, with job creation reaching an 88-month high.
The S&P Global Philippine Manufacturing Purchasing Managers’ Index (PMI) stood at 52.9 in October, a slowdown from a 27-month high of 53.7 in September. This was the second fastest measurement since January 2023.
A PMI reading above 50 indicates an improvement in business conditions, while a reading below 50 indicates a deterioration.
“The October PMI data indicated a slight slowdown in – but still solid – growth in the Philippine manufacturing sector. New order growth was again robust, allowing goods manufacturers to increase production again,” said Maryam Baluch, economist at S&P Global Market Intelligence in a report.
The Philippines’ PMI – a single-digit composite indicator of manufacturing performance – has recorded a reading above 50 every month since September 2023.
The Philippines recorded the highest PMI reading among the five Association of Southeast Asian Nations (ASEAN) countries in October, followed by Vietnam (51.2) and Thailand (50).
Meanwhile, Malaysia (49.5), Indonesia (49.2) and Myanmar (48.4) recorded contractions in October.
The Philippine PMI was also above the region’s average of 50.5, unchanged from September, S&P Global said.
The headline PMI measures production conditions based on the weighted average of five indices. It includes new orders (30%), output (25%), employment (20%), supplier delivery times (15%) and purchasing inventories (10%).
S&P Global said PMI data for the Philippines reflected a “sustained and solid” improvement in manufacturing conditions in October.
Despite a slowdown, new orders for the 15 grewe month in a row, while production grew for the seventh month in a row.
“The recent increases exceeded their series averages, driven by a growing customer base that reinforced underlying demand trends,” the report said.
Stronger demand allowed manufacturing companies to significantly increase workforcesfflevels in October.
“Philippine goods manufacturers have ramped up hiring, with the recent wave of job creation marking the biggest increase since mid-2017,” the report said.
With more employees, production Firms managed to address the slight build-up of backlogs and keep pace with current production requirements.
At the same time, improving demand allowed companies to boost purchasing activity, but at a slower pace than the previous month.
“Companies stated that higher commodity prices often prevented companies from purchasing inputs,” S&P Global said.
This prompted companies to use their existing inventory for orders, with pre-production inventories falling for the first time since February. Stocks of finished products have been depleted for the third month in a row, at the sharpest pace since January 2022.
Supply chains remained under pressure in October, with shortages of raw materials due to port congestion.
“Companies revealed supply-side challenges, with material shortages resulting in longer delivery times and slowing purchasing activity. It was also one of the main factors for rising input prices, which was exacerbated by the depreciation of the peso against the dollar,” Ms. Baluch said.
S&P Global noted that input price inflation rose to an eight-month high in October.
The peso closed at P58.10 per dollar on October 31, weakening from the closing rate of P56.03 on September 30.
Manufacturing companies are confident that current demand trends will continue over the next twelve months.
“Nevertheless, companies remain optimistic; more than half of respondents expect expansion in the coming year,” said Ms. Baluch.
‘BRIGHT SPOT’
“The Philippines is the only real bright spot in terms of recent momentum, although the September population cooled to 52.9 last month from 53.7 and the impact of these still solid gains won’t really be felt regionally due to relatively small production of the country. sector,” Pantheon Macroeconomics said in an emailed statement.
For the ASEAN region, Pantheon said the outcome was “softer than we expected” as the manufacturing sector recovered from the typhoons.
“The generally improved PMI figures over the past two months can be attributed to pent-up demand released by lowerFinterest rates as an easing of interest rates,” Leonardo A. Lanzona, professor of economics at Ateneo de Manila University, told reporters. Business world via Facebook Messenger.
He noted that companies typically increase production in the months leading up to the holidays in anticipation of stronger demand.
“As the country’s manufacturing base increases and the Christmas season ends towards the end of the year, expect the PMI growth rate to be much lower,” Mr Lanzona said.
However, he noted that supply-side issues, including skills shortages and poor adaptation of new technologies, continue to weigh on the manufacturing sector.
“Production could continue to grow given increased local demand during the holiday season and foreign demand as trade liberals move forwardization has even more effect,” John Paolo R. Rivera, president and chief economist at Oikonomia Advisory & Research, Inc. told this Business world via Viber message.
Meanwhile, Ma. Teresita Jocson-Agoncillo, executive director of the Confederation of Wearable Exporters of the Philippines, said wearables production remains slow at the end of September.
“We are at an average growth of 3% to 5% compared to the same period last year. The recent wage increase in the major regions – Regions 3, 4A and B, Region 7 and NCR – had an impact on orders for spring and summer 2025. These orders were addressed to the more competitive ASEAN countries,” she said Business world in a Viber message.