MANILA – Local manufacturing output grew at its slowest pace in seven months in March with the S&P Global Philippines Manufacturing PMI (purchasing managers index) slipping to 52.5 from 52.7 in February.
Despite this dip attributed in part to fewer orders from abroad, S&P Global said in its latest month update that the headline figure indicated a historically strong improvement in operating conditions.
Also, business confidence across the sector remained upbeat, as strong demand conditions buoyed optimism in the outlook for future output.
S&P Global said the March results showed that demand for manufactured Filipino goods remained strong, with both production and new orders rising at historically elevated rates.
This was the 14th month in a row that the PMI ended above 50, which means an overall increase (more positive responses than negative). Less than 50 means an overall decrease (more negative answers than positive).
Maryam Baluch, an economist at S&P Global Market Intelligence, said that both output and new orders rose at historically strong rates at the end of the first quarter of 2023.
Buying activities
Hence, companies raised their buying activities to keep up with the growth in sales.
Still, operating conditions improved at the slowest pace in seven months, partly due to the softer rise in production and stocks of purchases, and with a second month of job shedding weighing on the headline index.
“Despite a slight slowdown, March data revealed pressures on inflation and supply chain easing,” Baluch said.
“Operating expenses rose at the slowest pace in 27 months, while the incidence of delays was among the weakest since the current sequence of deterioration in vendor performance began in August 2019,” she added.
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.
S&P’s PMI is a weighted average of five indices — 30 percent based on new orders; 25 percent on output; 20 percent on employment; 15 percent on supplier delivery times; and 10 percent on stock purchases.
In the survey covering March, respondents noted that a stronger demand environment, new projects and a broader clientele helped boost sales.
Yet, foreign demand increased at a slower pace, with March data indicating only a fractional uptick in new business from abroad. This suggested that domestic demand buoyed total new sales growth.
S&P Global found that Filipino manufacturers remained strongly optimistic, with more than a half of the respondents predicting growth in output in the year ahead.
However, results also showed that the degree of confidence among local manufacturers was below the historical trend.
READ MORE:
https://business.inquirer.net/393885/firms-more-upbeat-for-q2-rest-of-2023
https://business.inquirer.net/394552/global-factory-activity-weakens-as-demand-falters