Philippines: Manufacturing PMI at nearly one-year high in November
December 1, 2017
The manufacturing Purchasing Managers’ Index (PMI) rose for the third consecutive month, and came in at a nearly one-year high of 54.8 in November, up from 53.7 in October according to a release provided by Nikkei and IHS Markit. The PMI thus moved further above the critical 50-point threshold which separates expansion from contraction in the manufacturing sector.
The strongest expansion in production since May and the fastest rise in new orders in a year underpinned November’s stronger reading. This prompted firms to increase employment for the second consecutive month. Domestic demand was again the main driver of sales growth, while growth in external orders was more moderate. Despite the notable rise in new orders, backlogs of work fell for the 20th consecutive month, as improved production processes, sub-contracting of work and additional staff allowed companies to expand production at the strongest pace since May.
On the price front, rising costs for input prices, especially imported raw materials, led robust cost inflation and higher selling prices. On a more positive note, business confidence remained elevated in October, as companies grew more optimistic about the outlook.
Commenting on the release, Bernard Aw, Principal Economist at IHS Markit, noted that:
“The PMI suggests the strong growth momentum in the Filipino economy has some way to go. However, robust economic activity has been marred by rising inflationary pressures, commonly associated with a weak exchange rate. As such, higher prices remain an area of concern that policymakers need to watch closely. A further rise in global raw material costs, combined with a weak peso, will generate an unwelcome tightening of businesses’ profit margins.”