The local manufacturing sector saw the strongest improvement in operating conditions for more than four years in April, a report by S&P Global Ratings revealed.

S & P Global report released on Monday, May 2, showed the Philippine purchasing managers’ index reached a reading of 53.3 in April from 53.2 percent in the previous month. This marks the third successive month where the headline figure posted above the 50.0 no-change mark that separates growth from contraction. The latest reading was also the highest since November 2017.

The country showed further signs of recovery from the last wave of Covid-19 infections in January, which also pointed to a solid improvement in overall factory operating conditions, S&P Global Ratings said.

“The sector benefited from quicker upturns in output and new orders as pandemic-related restrictions eased. Furthermore, stronger client demand prompted one of the fastest accumulations of pre-production inventories on record,” S&P Global Ratings said.

However, both input price and output charge inflation remained elevated, as the rates of increase easing only slightly from the record highs seen in March.

Meanwhile, output and new orders increased for the third month running in April, with the respective rates of growth both accelerating from March to the quickest since November 2018.

S&P Global Ratings said anecdotal evidence indicated that looser pandemic restrictions had supported the latest upturns in customer demand and production schedules.

However, demand from international markets softened for the second month running due to Russia’s invasion of Ukraine, along with higher shipping costs and limitations caused by the pandemic abroad.

In addition, raw material shortages and transportation delays also led to a further lengthening of average suppliers’ delivery times.

Buying activity in April, meanwhile, increased with customer demand improved while production requirements rose. “Notably, the rate of growth was the fastest in more than three years.”

At the same time, firms also increased their holdings of raw materials and semi-finished items. Furthermore, the rate of accumulation in stocks of inputs accelerated to one of that fastest seen since the survey began in January 2016.

“Business confidence regarding the 12-month outlook for output improved to a four-month high in April. Weaker Covid-19 containment measures underpinned forecasts of stronger demand conditions and rising output in the coming months,” S&P Global Ratings said.