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Manila Bulletin devider Business devider Factory output stable despite weak international sales

Factory output stable despite weak international sales

Published Sep 2, 2024 04:57 am

Manufacturing activity in the country remained stable in August, as sluggish international sales hindered growth in output and new orders, according to S&P Global's report on Monday, Sept. 2.

The latest S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI), which measures factory output, held steady at 51.2, the same level recorded in June. 

This marks the twelfth consecutive month that the index has remained above the 50-point threshold, indicating ongoing growth.

Maryam Baluch, an economist at S&P Global Market Intelligence, said that the Philippine manufacturing sector has demonstrated sustained, albeit modest, gains as the third quarter progresses. 

“Growth in output and new orders accelerated on the month, thereby highlighting improving demand trends. However, employment fell, and buying activity cooled, suggesting that manufacturers remain cautious about growth prospects,” Baluch said.

She also noted that confidence levels in the latest survey dropped to a four-month low, further indicating that expectations for production have softened.

Looking ahead, S&P Global reported that firms in the Filipino manufacturing sector anticipate further output expansion over the next 12 months, with the index remaining significantly above the neutral 50.0 mark. 

The PMI is derived from a survey of approximately 400 manufacturers and is a weighted average of several factors, including new orders, output, employment, suppliers’ delivery times, and purchase stocks.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said that while the manufacturing PMI remained steady lasty month, there were signs of slowdown in certain components. 

Ricafort attributed this slowdown partly to the “Ghost Month" and inclement weather, which caused disruptions in work and production.

“Lower local policy rates and [US Federal Reserve] Fed rates would lead to cheaper loans/credit for manufacturers, faster global and local investments, trade and other economic/business activities, going forward,” Ricafort said in a Viber message.

Last week, the US Fed indicated it may cut interest rates as early as September to alleviate the financial burden on households and businesses facing high borrowing costs.

Meanwhile, on Aug. 15, the BSP lowered interest rates by 25 basis points, bringing the reverse repurchase rate down to 6.25 percent. (Derco Rosal)

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Philippines Manufacturing Purchasing Managers’ Index manufacturing sector
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