Filipino manufacturers registered a sustained improvement in operating conditions across the sector in November due to strong demand despite higher consumer prices, the latest survey from S&P Global revealed.
On Thursday, Dec. 1, S&P Global said the Philippines manufacturing purchasing managers' index (PMI) stood at 52.7 last month, up from 52.6 in October. This is the tenth consecutive month that the headline figure registered above the no-change 50.0 threshold.
Maryam Baluch, S&P Global Market Intelligence economist, said the improvement across the sector primarily stemmed from greater demand conditions drove higher sales and output.
In November, demand conditions remained strong midway through the fourth quarter, as Filipino manufacturing output and factory orders grew for the third consecutive month, hitting its fastest since June.
However, export conditions remained weak, thereby extending the current sequence of contraction in new export orders observed since March.
“Weak foreign client demand weighed on total new order growth across the sector which was primarily driven by domestic demand. Nonetheless, the downturn in export sales softened from October's recent low,” S&P Global said.
It, however, noted that firms increased their purchases of inputs for the third month running in November, to support growth in overall sales and in anticipation of higher orders in the coming months.
Moreover, the rate of expansion quickened from October to the fastest in six months, and signalled a solid increase overall.
On the price front, inflationary pressures remained elevated as the rate of input price inflation gathered pace for the second month running, due to higher energy costs.
Similarly, output prices increased at a quicker rate in November as firms chose to pass costs on to clients.
In addition, supply-chain pressures continued to persist. While, the incidence of delays was at three-month low, port congestion and material shortages meant that vendor performance deteriorated strongly.
Baluch said that while the manufacturing sector has shown strong gains during 2022, elevated price pressures pose an ongoing threat, coupled with supply-chain issues, the peso weakening against the dollar adds further fragility.
To curb inflation rates, Bangko Sentral ng Pilipinas raised interest rates by 75 basis points in November.
“As the manufacturing sector has heavily relied on demand to help boost growth, the rise in rates, with the prospect of further potential monetary tightening, could impact customer spending,” Baluch said.
“Nonetheless, firms remain strongly upbeat in the outlook for output for the coming 12 months,” she added.