by Derco Rosal
The country’s employment rose in October to its highest level in the past seven years due to the continued expansion of the manufacturing sector, S&P Global reported on Monday, Nov. 4.
S&P Global said the strong uptick in new orders drove the local manufacturing sector's steady improvement, despite a slower growth rate.
“Employment became the real stand-out this month [October], with the rate of job creation the strongest in over seven years,” Maryam Baluch, economist at S&P Global Market Intelligence, said.
However, the latest S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI), which measures factory output, declined from September’s two-year high of 53.7 to 52.9.
As cited by S&P Global, rising raw material prices often discouraged firms from buying inputs.
Although it fell behind September's growth, S&P Global said October’s index reached the second-highest level since January last year, which also marked the fourteenth consecutive month it has stayed above the 50-point threshold, indicating ongoing growth.
Baluch noted that the Philippine manufacturing sector showed a stable growth, with strong new orders enabling producers to increase output.
“The expansion in new orders was again robust, allowing goods producers to raise their output again,” Baluch said.
Despite ongoing growth in new orders, reduced purchasing activity forced firms to draw from their inventories, leading to the first decline in pre-production stocks since February and the largest drop in over a year.
Finished goods inventories fell for the third straight month, with the sharpest decline since January 2022, signaling a shift in inventory management among manufacturers who typically prefer higher stock levels.
S&P Global also reported that supply chains remained strained in October, with vendor performance declining sharply due to raw material shortages and port congestion.
Meanwhile, increased demand trends prompted firms to ramp up the expansion of their workforce, with Filipino producers experiencing the largest job growth since mid-2017.
Employment growth helped firms reduce backlogs and meet production demands, leading to a decline in outstanding business in October, with the seasonally adjusted index below 50 in 15 of the last 16 periods.
Further, material shortages and peso depreciation against the US dollar increased input costs, pushing inflation to an eight-month high as companies also faced rising labor and logistics expenses.
“Nonetheless, firms remain optimistic with more than half of respondents anticipating expansion in the year ahead," Baluch said.