IHS Markit: Manufacturing growth slowed in November as production costs rose
MANILA, Philippines–Despite expectations of robust demand during the holiday season, manufacturing growth slowed in November to its lowest level in five months due to higher production costs.
The latest IHS Markit Philippines Manufacturing Purchasing Managers’ Index released Monday showed that the seasonally adjusted PMI declined to 51.4 last month, the lowest since June’s 51.3.
A PMI score above 50 nonetheless meant there was an overall increase in manufacturing activity.
“Growth softened to a modest pace in the Philippines manufacturing sector in November, as firms noted the weakest rise in factory orders since August. In particular, this led companies to hold back on hiring plans, signalling reduced pressure on capacity as output growth slowed. Meanwhile, stocks continued to rise, but at a notably subdued rate,” IHS Markit economist David Owen said in a statement.
In particular, IHS Markit said “cost pressures ticked up at a sharper rate, leading firms to raise output prices modestly.”
“On the price front, input costs faced by Filipino goods producers rose solidly, marking the quickest rate of inflation since February. According to panelists, this was mainly due to increased raw material prices, in part resulting from higher demand for inputs,” it said.
“Companies that reported a rise in cost burdens often passed this onto consumers with an increase in selling prices. That said, the overall mark-up was modest and only slightly faster than October’s 45-month low,” it added.
Also, “manufacturers continued to highlight traffic issues in November, leading to the fourth deterioration in vendor performance in as many months,” IHS Markit said.
Despite the slowdown in November, Owen said “manufacturers looked towards 2020 with improved optimism as growth plans began to take shape.”
As such, output expectations were the strongest since February or a nine-month high in November, Owen said.
