By Aubrey Rose A. Inosante, Reporter
PHILIPPINE manufacturing expanded for a 14th month in a row in October, however the tempo of progress slowed month on month amid a softer rise in new orders and output, S&P International mentioned on Monday.
On the similar time, manufacturing corporations ramped up hiring, with job creation hitting an 88-month excessive.
The S&P International Philippine Manufacturing Buying Managers’ Index (PMI) stood at 52.9 in October, slowing from the 27-month excessive of 53.7 in September. This was the second-fastest studying since January 2023.
An above 50 PMI studying alerts an enchancment in working situations, whereas a studying beneath 50 signifies a deterioration.
“October PMI knowledge indicated a slight easing in — however nonetheless strong — progress throughout the Filipino manufacturing sector. The growth in new orders was once more strong, permitting items producers to lift their output once more,” Maryam Baluch, economist at S&P International Market Intelligence mentioned in a report.
The Philippines’ PMI — a composite single-figure indicator of producing efficiency — has posted an above 50 studying each month since September 2023.
The Philippines logged the best PMI studying among the many 5 Affiliation of Southeast Asian Nations (ASEAN) nations in October, adopted by Vietnam (51.2) and Thailand (50).
In the meantime, Malaysia (49.5), Indonesia (49.2), and Myanmar (48.4) recorded contractions in October.
Philippine PMI was additionally above the area’s common studying of fifty.5, which was unchanged from September, S&P International mentioned.
The headline PMI measures manufacturing situations based mostly on the weighted common of 5 indices. It contains new orders (30%), output (25%), employment (20%), suppliers’ supply occasions (15%) and shares of purchases (10%).
S&P International mentioned Philippines PMI knowledge mirrored a “sustained and strong” enchancment in manufacturing working situations in October.
Regardless of a slowdown, new orders grew for the 15th consecutive month, whereas output expanded for a seventh straight month.
“The latest will increase outpaced their sequence averages, pushed by a rising buyer base that strengthened underlying demand tendencies,” it mentioned.
Stronger demand allowed manufacturing corporations to considerably increase staffing ranges in October.
“Filipino items producers ramped up hiring, with the latest wave of job creation marking probably the most vital enhance since mid-2017,” it mentioned.
With extra staff, manufacturing firms managed to deal with the slight buildup of backlogs and sustain with present manufacturing necessities.
On the similar time, the advance in demand allowed firms to spice up buying exercise, however at a weaker tempo than the earlier month.
“Corporations said that larger costs of uncooked supplies typically dissuaded corporations from buying inputs,” S&P International mentioned.
This prompted corporations to make use of their current stock for orders, with pre-production inventories falling for the primary time since February. Shares of completed items had been depleted for a 3rd month in a row, and on the sharpest charge since January 2022.
Provide chains continued to be stretched in October, with shortages of uncooked supplies on account of port congestion.
“Corporations revealed supply-side challenges, with materials shortages leading to longer supply occasions, and cooling shopping for exercise. It was additionally one of many key components for rising enter costs, which was additional exacerbated by the depreciation of the peso towards the greenback,” Ms. Baluch mentioned.
S&P International famous the speed of enter worth inflation rose to an eight-month excessive in October.
The peso closed at P58.10 per greenback on Oct. 31, weakening from the P56.03 shut on Sept. 30.
Manufacturing corporations are constructive that present demand tendencies will proceed within the subsequent 12 months.
“Nonetheless, corporations stay optimistic with greater than half of respondents anticipating growth within the yr forward,” Ms. Baluch mentioned.
‘BRIGHT SPOT’
“The Philippines is the one actual lone vivid spot when it comes to latest momentum, although its September pop to 53.7 cooled to 52.9 final month and the influence of this still-sturdy acquire gained’t actually be felt regionally because of the nation’s comparatively small manufacturing sector,” Pantheon Macroeconomics mentioned in an e-mailed assertion.
For the ASEAN area, Pantheon mentioned the end result was “softer than we anticipated” because the manufacturing sector recovered from typhoons.
“The widely improved PMI charges within the final two months may be attributed to pent-up demand which had been launched by decrease inflation charges because the easing of rates of interest,” Leonardo A. Lanzona, an economics professor on the Ateneo de Manila College informed BusinessWorld through Fb Messenger.
He famous that firms sometimes enhance manufacturing within the months forward of the vacations in anticipation of stronger demand.
“Because the nation’s manufacturing base will increase and the Christmas season completes by the top of the yr, anticipate the expansion charge of PMI to be a lot decrease,” Mr. Lanzona mentioned.
Nonetheless, he famous supply-side points, together with the dearth of expertise and the poor adaptation of recent applied sciences, proceed to weigh on the manufacturing sector.
“Manufacturing could proceed to develop given elevated native demand through the holidays and international demand as commerce liberalization takes additional impact,” John Paolo R. Rivera, president, and chief economist at Oikonomia Advisory & Analysis, Inc. informed BusinessWorld through Viber Message.
In the meantime, Ma. Teresita Jocson-Agoncillo, government director on the Confederation of Wearable Exporters of the Philippines, mentioned wearables manufacturing stays sluggish as of end-September.
“We’re at a mean — 3% to five% progress vis-a-vis on the similar interval final yr. The latest wage hike enhance throughout main areas — Areas 3, 4A and B, Area 7, and NCR — had an influence on Spring-Summer season 2025 orders. These orders had been directed to extra aggressive ASEAN nations,” she informed BusinessWorld in a Viber message.
