Philippines: Manufacturing PMI softens in October, improvement of conditions continues

The S&P Global Manufacturing Purchasing Managers' Index (PMI) came in at 52.6 in October, marginally down from September's 52.9. As a result, the index remained above the 50.0 no-change threshold, pointing to a continued, albeit moderating, improvement in manufacturing sector operating conditions from the previous month.

October’s weaker improvement largely stemmed from output growth softening from the month prior. This more than offset new orders increasing at a stronger pace, buttressed by improved demand. In addition, the continued improvement in new sales led to higher staffing levels, and greater purchasing activity boosted firms’ production capacity; however, the rates of expansion of both indicators softened from those of September. Still, the majority of companies surveyed remained optimistic about the outlook over the next 12 months. Less positively, foreign demand continued to falter, with new orders from abroad falling at the sharpest pace since March. Meanwhile, supply chain difficulties weighed on manufacturing activity, notably through longer delivery times amid unfavorable weather and port congestion. Lastly, higher energy and input costs, coupled with a weaker exchange rate, kept inflation elevated, weighing on the index this month.

Our panelists see manufacturing output rising 4.1% in 2023, which is down 0.5 percentage points from the previous month’s estimate, and 6.2% in 2024.