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Philippines: Factory activity rises to 6-month high in December
MANILA, Philippines — Manufacturing activity in the country grew at its fastest pace in six months, supported by strong local demand.
A report released by S&P Global Market Intelligence yesterday showed the Philippines’ manufacturing purchasing managers’ index (PMI) rose to a six-month high of 53.1 in December from 52.7 in November.
The PMI is based on a survey covering around 400 manufacturers and takes into account the following: new orders, output, employment, suppliers’ delivery times, and stocks of purchases.
A PMI reading above 50 indicates an overall increase, while below 50 denotes contraction.
“The latest PMI data signalled sustained growth across the Filipino manufacturing sector. The release of pent-up demand because of the COVID pandemic continued to help the recovery of the manufacturing sector this year,” S&P Global Market Intelligence economist Maryam Baluch said.
S&P Global said growth in output levels was the fastest seen since June, while new orders increased for the fourth straight month due mainly to domestic demand. Orders from overseas contracted for the 10th consecutive month.
The manufacturing sector also posted growth in employment as firms resumed hiring activity to meet higher business requirements.
“While the return to growth was clearly a positive indication of improvement across the Filipino manufacturing sector, the rate of job creation was only fractional overall,” S&P Global said.
S&P Global said there was a slight increase in the quantity of inputs purchased in December, while pre-production inventories went up at a softer pace from November.
In order to sell goods despite continued inflationary pressures, manufacturing firms hiked their selling prices at the softest rate for a year in December.
Amid rising market competition and inflation, manufacturing firms’ outlook weakened to a four-month low in December.
Baluch said challenges such as supply chain disruption and inflationary pressures are expected to remain a concern for the manufacturing sector this year.
“While the central bank of Philippines has taken measures to curb inflation, global supply chain delays and material shortages remain a much more complex issue to solve,” she said.
The Bangko Sentral ng Pilipinas (BSP) raised interest rates by a total of 350 basis posts last year to rein in inflation.
In November, the country’s headline inflation rate surged to a 14-year high of eight percent due to faster food price increases.
Last week, the BSP said it expects inflation to be within the 7.8 to 8.6 percent range in December, citing higher electricity, food and liquefied petroleum gas prices.
S&P Global said manufacturers have an optimistic outlook for output this year, with some even planning to make investments.
“Goods producers remain strongly upbeat for the year-ahead, banking largely on domestic demand to help maintain growth,” Baluch said.
Source: https://www.philstar.com/business/2023/01/04/2235093/factory-activity-rises-6-month-high-december