Philippines: Manufacturing PMI improves in November
The S&P Global Manufacturing Purchasing Managers’ Index (PMI) inched up to 52.7 in November from October’s 52.6. As a result, the index moved further above the 50.0 no-change threshold, signaling a faster improvement in manufacturing sector operating conditions compared to the previous month.
Stronger demand in November resulted in faster growth in output, factory orders and buying activity, leading to this months improvement. Manufacturing production and factory orders registered the strongest expansions since June, which, coupled with expectations for a further acceleration in new orders, incentivized firms to speed up input purchases. Intensifying buying activity resulted in higher holding stocks, which should support production in the coming months.
Less positively, external demand continued to weigh on the index; new export orders contracted for the ninth consecutive month, outpacing domestic growth in new orders. In addition, price pressures kept their hold on both input and output price inflation; firms passed higher energy costs to consumers. The pesos depreciation against the greenback further exacerbated firms price woes. Meanwhile, the six-month job-creation spree came to a halt in November, with employee levels falling for the first time since March. Looking ahead, businesses were increasingly optimistic about activity growth in the upcoming year, largely owing to stronger client demand.
On the outlook, Maryam Baluch, economist at S&P Global, commented:
“While the manufacturing sector has shown strong gains during 2022, elevated price pressures pose an ongoing threat. Coupled with supply-chain issues, the peso weakening against the dollar adds further fragility. To curb inflation rates, Bangko Sentral ng Pilipinas raised interest rates by 75 base points during November. As the manufacturing sector has heavily relied on demand to help boost growth, the rise in rates, with the prospect of further potential monetary tightening, could impact customer spending.”