MANILA -The manufacturing sector in the Philippines returned to growth in September, albeit marginal, after ending in August a two-year expansion run, according to S&P Global.
The S&P Global Philippines PMI or purchasing managers index read at 50.6 in September following a 49.7 print in August.
Based on a monthly survey of managers, a PMI readout of above 50 translates to an overall increase in output while less than 50 means an overall decrease.
Even then, S&P Global said in their latest monthly report that while the Philippine PMI for September signaled an improvement in the health of the domestic manufacturing sector, the pace of growth was “only marginal” overall.
Results from the latest S&P Global poll for the Philippines showed that growth stemmed from a fresh increase in new orders of manufactured goods, which also supported an accelerated rise in production.
And, as demand gears up and business needs rise, manufacturers also increased their workforce for the first time in four months.
READ: Pulse Asia: 89% of Filipinos believe gov’t should back manufacturing sector
Growth supported by domestic market
Maryam Baluch, S&P Global Market Intelligence economist, said that in each of the three cases—increase in orders, output and hiring— the rate of growth remained historically subdued.
“Thus, suggesting some weakness still present within the sector,” Baluch said. “Moreover, latest data suggested that growth was supported by the domestic market as export sales fell for the first time in nine months.”
READ: July trade gap narrowed as import bill dropped
“Global headwinds including muted foreign demand conditions weighed on overall growth in September, with mounting concerns regarding the sustainability of future demand reported by firms,” she added.
Still, Baluch said manufacturers sought to expand their staff despite signs of spare capacity, amid hopes of further pick ups in new orders in the coming months.
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. .