Local manufacturing activity improved in September this year due to increased customer demand that boosted production levels and factory orders.

The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) rose 52.9 last month from 51.2 in August.

“The seasonally adjusted headline figure posted above the neutral 50.0 threshold for the eighth month running, indicating a further improvement in the health of the Filipino manufacturing sector,” S&P Global said in a statement on Monday, Sept. 3.

Maryam Baluch, S&P Global Market Intelligence economist, said growth across the manufacturing sector quickened in September based on latest PMI data.

Baluch said companies have cited that there was an increase in customer demand, which allowed their production levels and factory orders to grow for the first time since June.

"Adding to the good news, inflationary pressures, which have been uncomfortably high in the past couple of months, moderated in the latest survey period, hinting that inflation may have peaked,” Baluch said.

The Philippine Statistics Authority is set to announce the September inflation rate later this week.

However, the government expects headline inflation last month to settle well above the target range. In particular, the Bangko Sentral ng Pilipinas estimated that inflation likely ranged around 6.6 percent to 7.4 percent.

As of August, inflation averaged at 4.9 percent, well above the government’s goal of 2.0 percent to 4.0 percent.

“Inflation rates remained sharp and could still be harmful to demand conditions, with firms citing rising material and energy prices, alongside an unfavourable exchange rate, which could place upward pressure on costs,” Baluch said.

Moreover, widespread supply-chain issues continue to hamper production, the economist said.

"Overall, sustained growth across the sector has meant that firms are largely optimistic in regards to expansion in output in the future,” Baluch said.