MANILA —Philippine factories opened 2024 with sluggish growth as demand from clients overseas cooled, but expectations of greater sales in the coming months prompted manufacturers to continue beefing up their inventories and hire more people after months of job shedding.
S&P Global reported that the Philippines’ Purchasing Managers’ Index (PMI), a gauge of the manufacturing sector’s output, stayed above the 50-mark that separated growth from contraction in January. But the PMI reading eased to 50.9 from 51.5 recorded in December.
Despite extending the current run of growth to five consecutive months, the latest print signaled an expansion that was “weaker than the series average and only marginal overall,” S&P said.
“The turn of the year revealed a slight weakness in demand conditions, as new orders and output growth eased,” said Maryam Baluch, economist at S&P Global Market Intelligence.
“Moreover, looking forward, global headwinds and sluggish demand from external markets, especially China, are likely to weigh on the Filipino manufacturing sector,” Baluch added.
READ: Asia’s factories struggle for momentum amid soft Chinese demand
There were still some good streaks of data that came out of S&P Global’s monthly survey of 400 manufacturers, which showed that employment levels were left unchanged in January after two straight months of painful job cuts.
Muted inflationary pressures
Some companies still opted to trim costs by reducing their headcount while resignations had been recorded, S&P reported, but that was offset by firms that decided to hire more workers to help meet an anticipated demand for their products.
Such optimism sent factories scrambling to build their stocks in January. Survey data showed preproduction inventories had risen for the fourth straight month despite material shortages and port congestions.
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What fueled factories’ bullish sales outlook was the “muted” inflationary pressures that resulted in weak increase in their selling prices, which should help make Philippine products more competitive in markets overseas.
“Finally, firms remained positive overall in their outlook, despite confidence easing to a three-month low and registering below the long-run average,” S&P said. —Ian Nicolas P. Cigaral