Local manufacturing firms reported a further improvement in operating conditions in October, but the growth moved at a much pace due to heightened inflationary pressures as well as costlier factory gate charges. The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) rose to 52.6 last month from 52.9 percent in September. The headline figure was still above 50.0 no-change threshold that separates growth from contraction. Maryam Baluch, S&P Global Market Intelligence economist said on Wednesday, Nov. 2, that the latest PMI data revealed yet another round of expansion across the manufacturing sector. Baluch said demand conditions continued to improve, resulting in a further rise in output and new business placed at good producers. “Firms also signaled growth in buying activity and employment. Despite the pace of the latest upturns easing slightly on the month, firms continued to increase capacity and stocks to support future growth,” Baluch said. While ongoing growth meant firms remained positive overall, Baluch still noted that supply-side constraints and rising global inflation continued to weigh on the manufacturing sector. “Anecdotal evidence noted shipping delays, bad weather and congestion continued to hamper production. Moreover, currency weakness and global price rises in energy and materials resulted in the rate of input price inflation regaining momentum,” the economist said. Both average cost burdens and charges levied continued to rise at sharp rates in October. Moreover, the pace of input price inflation regained momentum after easing to a 20-month low in September amid reports of higher energy and material costs and an unfavourable exchange rate. Despite input costs increasing at a quicker rate, firms raised their charges at a slightly slower pace. The respective seasonally adjusted index fell for the second month in a row, to signal the softest uptick in output charges since February. While an improvement in operating conditions across the manufacturing sector was reported during October, the latest Future Output Index reading took a hit from the recent high in September. Nevertheless, output expectations for the coming 12 months remained optimistic with nearly 60 percent of panellists upbeat regarding the outlook for production. Confidence was underpinned by hopes of continued upticks in demand over the coming year.