The country’s manufacturing sector continued its robust expansion in September, posting the strongest growth in two years despite headwinds such as weakening international demand and supply chain disruptions.
According to S&P Global, this growth was mainly driven by a significant increase in new orders and output, which in turn led to higher hiring and purchasing activities.
The latest S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI), which measures factory output, jumped to 53.7 last month from 51.2 in August.
This index marks the strongest improvement in the sector since mid-2022, and the 13th consecutive month, it has remained above the 50-point threshold, signaling continued growth.
S&P Global economist Maryam Baluch noted that the growth in the Philippine manufacturing sector at the end of the third quarter was driven by faster increases in new orders despite weaker international demand.
"While weak international demand and supply chain issues will act as headwinds, robust domestic demand is expected to drive growth,” Baluch said.
She added that the increasing production needs and growing confidence among manufacturers led to more hiring and purchasing in September, with buying activity reaching its highest level since January 2023.
Baluch also explained that the hike in prices is the result of suppliers increasing their charges and recent weather changes affecting the cost of raw materials.
Looking forward, manufacturers anticipate demand trends to continue rising and support further production growth. This optimistic outlook is boosted by their increased confidence in September, reaching its highest level since May.
The PMI findings were based on surveys of approximately 400 purchasing managers across various manufacturing sectors, utilizing a weighted average of factors including new orders, output, employment, suppliers’ delivery times, and purchase stocks.
In a related development, the Philippine Statistics Authority (PSA) reported that factory gate prices declined by one percent in August compared to last year due to significant drops in coke and refined petroleum products.
Month-on-month, the Producers’ Price Index (PPI) fell by 0.2 percent in August, which was driven by decreases in transport equipment and food products.
This decrease marked a reversal of the modest factory gate price increase of 0.0004 percent recorded in July.
The PSA report indicated that top contributors to the annual growth rate of the PPI for manufacturing were the manufacture of coke and refined petroleum products, fabricated metal products, and other non-metallic mineral products.(Derco Rosal)