PH manufacturing growth slowed in Oct
The domestic manufacturing sector continued to expand but was slightly less active after three consecutive months of improvement, with the S&P Global Philippines Manufacturing PMI (purchasing managers index) easing to 52.6 in October from 52.9 in September.
The S&P Global PMI for the Philippines is based on a survey of managers at 400 companies who decide on choosing suppliers and buying supplies of production inputs.
A PMI number of more than 50 means an overall increase (more positive responses than negative) in activity while less than 50 means an overall decrease (more negative answers than positive).
Maryam Baluch, an economist at S&P Global Market Intelligence, said that despite the slower pace in September, companies continued to increase capacity and stocks to support future growth.
“While ongoing growth meant firms remained positive overall, supply-side constraints and rising global inflation continued to weigh on the manufacturing sector,” Baluch said in a statement.
Currency weakness
She added that anecdotes from respondents revealed that shipping delays, bad weather and congestion continued to hamper production.
“Moreover, currency weakness and global price rises in energy and materials resulted in the rate of input price inflation regaining momentum,” Baluch said.
The Philippine Statistics Authority will announce on Nov. 4 the inflation numbers for October, which the Bangko Sentral ng Pilipinas (BSP) believes to be in the range of 7.1 percent to 7.9 percent.
Inflation in the Philippines was pegged at 6.9 percent in September, and the BSP thinks it will slowly go down in the succeeding months after breaching the 7-percent level in October.
According to S&P Global, overall factory orders increased in October, but volumes of new work from abroad contracted at the sharpest pace since the recent sequence of decline began in March.
New sales
In addition, growth in new sales resulted in businesses expanding workforce numbers for the sixth consecutive month as well as buying activity increasing in the second successive month.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., noted that the S&P Global Philippines PMI number has been above 50 for the 14th straight month and was still among its highest levels since the pandemic started in 2020.
However, he said the PMI number was still lower than the prepandemic high of 54.3 posted in April 2019.
Aside from the factors that S&P Global mentioned, Ricafort attributed the slowdown to higher global and local interest rates that led to higher borrowing costs for manufacturers, which in turn partly weighed on new manufacturing investments and expansion plans.
Also, the slow down happened even if some manufacturers seasonally increased production activities in preparation for the usual increase in sales in the fourth quarter of the year.
PMI for October was lower than September “but still better than 51.0 a year ago—October 2021—when there were pockets of hard lockdowns and restrictions amid the [COVID-19] Delta variant surge,” Ricafort said. INQ
