Philippine manufacturing operations further strengthened in November, bolstered by sustained and stronger expansion in output and new orders and the slowing of input price inflation.
The headline S&P Global Philippines Manufacturing PMI–a composite single-figure indicator of manufacturing performance—ticked up from 52.4 in October to 52.7 in November 2023, the strongest improvement in operating conditions since February, according to S&P Global Market Intelligence in a new report.
The uptick reflected gains last month as rates of growth for new orders quickened to an eight-month high, while output growth was at its strongest rate in 10 months. Firms noted that strong demand both in domestic and foreign markets, new clients, and increased contract work boosted overall sales and production.
However, purchasing activity also decreased for the first time in 15 months.
Higher prices for raw materials and concerns of overstocking dissuaded input buying at some firms. Still, some businesses continued to purchase inputs amid growing input requirements, helping to offset the overall downturn.
Stocks of purchases expanded for the second month running, although the rate of increase was modest and weaker than in October. Growth in inventories in part stemmed from manufacturing firms holding onto inputs in an effort to become more cost-effective.
November data also pointed to a modest reduction in manufacturing employment following two months of tepid growth. The drop came amid continued spare capacity, as backlogs dropped for the fifth month running and sharply, leading some firms to curtail staffing.
Meanwhile, vendor performance worsened in November following two months of improvements.
The rate at which lead times lengthened was moderate overall, with firms citing material shortages and congestion at ports. This translated into some reports of higher material and supplier costs which were largely blamed for the latest rise in cost burdens.
Despite this, with other price pressures remaining muted, the rate of input price inflation was the weakest recorded in over three years, resulting in a similarly modest uptick in manufacturers’ selling prices, said the report.
Lastly, Filipino goods producers remained optimistic, with just under half of respondents (46%) predicting an expansion in output in the coming 12 months. While this marked an improvement since October, confidence levels were still historically subdued.
