Philippines: Manufacturing PMI rises to nearly one-year high on soaring production in November
December 3, 2018
According to data released by Nikkei and IHS Markit, the manufacturing Purchasing Managers’ Index (PMI) edged up to 54.2 points in November from 54.0 points in October, climbing further above the critical 50-point threshold that separates expansion from contraction in the manufacturing sector.
Business conditions continued improving in November, largely thanks to a sharp acceleration in output growth, which rose at the fastest rate in nearly two years, and a strong uptick in new orders. Despite the surge in new business inflows, new export orders plunged at the fastest rate on record, signaling that domestic demand is doing the heavy lifting in the continued expansion. In response to stronger demand, firms scaled up purchasing activity, albeit at a marginally softer rate than in October. Meanwhile, inventories rose at a quick clip in anticipation of future demand. Despite stronger production, hiring activity was subdued in November, although backlogs of work continued to fall, suggesting ample staff level to meet production needs. Supplier delivery times, however, lengthened for the fourth consecutive month due to congestion at Manila’s port.
Inflationary pressures eased in November as input costs rose at the weakest pace so far this year. Consequently, output prices also increased at a slower rate. Commenting on softer inflation in November, David Owen, economist at IHS Markit noted: “Recent pressures from the TRAIN laws and the exchange rate with the dollar are showing signs of wavering, offering hope of a more settled end to 2018 for manufacturers.”
Lastly, business confidence concerning output in the year ahead remained strong in November.
Author: Lindsey Ice, Economist