Domestic manufacturing in October grew at the fastest rate in the region, the latest Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI) released Monday showed.
The seasonally adjusted PMI jumped to a 10-month high of 54 last month from 52 in September, global research firm IHS Markit said in a report.
A PMI score of above 50 indicates an overall increase in manufacturing activity.
In a separate report on Asean, IHS Markit noted that “the Philippines topped the Asean manufacturing rankings again in October, with a substantial rate of expansion in output and new orders.”
In a statement, IHS Markit economist David Owen said the high PMI last month “indicated a marked improvement in the health of the sector at the start of the fourth quarter.”
“Order book growth was also sharp, although export demand fell marginally. Overall, Filipino firms remained highly optimistic about the business outlook over the coming year,” Owen added.
However, Owen said high inflation still posed a risk to manufacturing growth.
“Inflationary pressures led to the sharpest uptick in selling prices seen since the survey began in 2016. Businesses continued to feel the burden of higher raw material costs, the TRAIN law and a weakening peso. The recent trend suggests that price pressures are unlikely to relent in the coming months,” Owen said, referring to the Tax Reform for Acceleration and Inclusion Act.
Most economists expect inflation to have eased in October and already peaked during the third quarter, although they see the full-year rate of increase in prices of basic commodities to average beyond the government’s 2-4 percent target range.
“The survey also pointed to an impact from recent port congestion at Manila, as delivery times worsened considerably in October. Nevertheless, manufacturers continued to stay on top of order volumes,” according to Owen . —BEN O. DE VERA