PH factories defy production woes with Feb output growth
MANILA, Philippines — Production woes failed to stop the rebound of local factory output in February from a “subdued” performance at the start of the year, thanks to growth in new orders that also encouraged manufacturers to hire more workers to meet the demand.
A monthly survey of 400 firms showed the Philippines’ Purchasing Managers’ Index (PMI), a measure of manufacturing output, went up to 51.0 last month, from 50.9 in January, S&P Global said in a report on Friday.
This marked the sixth straight month that the PMI reading settled above the 50-mark separating growth from contraction. The Philippines also outperformed the Association of Southeast Asian Nations region which, on average, posted a PMI of 50.4 in February.
READ: PH factory output grew at a slower pace in January
Maryam Baluch, economist at S&P Global Market Intelligence, said growth in new orders gained momentum in February, recovering from weak demand seen in January.
“The start of the year was somewhat subdued for Filipino manufacturers, amid muted demand,” Baluch said.
Rise in exports
Survey results showed there was a renewed rise in export sales last month, albeit “fractional.” But S&P said it was the first time since November last year that appetite for Filipino manufactured goods in markets abroad improved.
READ: Asia’s factories struggle for momentum amid soft Chinese demand
The stronger demand, in turn, prompted factories to beef up their purchases of raw materials and other production requirements. But companies encountered problems in fulfilling orders due to material shortages that slowed production to “near-stagnation” and depleted inventories at the fastest rate since January 2022.
Supply chain problems
That said, companies had to raise their selling prices as supply chain problems added cost burdens to them, reducing the competitiveness of Filipino-made products in key export markets. Already, S&P said the material shortages “weakened” manufacturers’ confidence for the year ahead.
“Growth in production was only fractional, with firms chipping away at their holdings of inputs and finished items to meet order requirements,” Baluch said.
Despite the production woes, there were still some good findings in S&P’s new report. Manufacturers polled said the higher orders prompted them to hire more workers for the first time since last October.
While the increase in job creation in February was “modest,” S&P said the expansion was the sharpest in 16 months nevertheless. INQ
