October 2, 2024 | 12:00am
MANILA, Philippines — Manufacturing activity in September posted its fastest growth rate in two years driven by strong domestic demand, according to S&P Global.
In a statement yesterday, S&P Global said the Philippines’ purchasing managers’ index (PMI) for manufacturing in September was at 53.7, up from 51.2 in August.
The latest PMI reading is the highest since mid-2022, showing a solid improvement in the local manufacturing sector’s health.
Based on a survey of around 400 manufacturers, the PMI is the weighted average of the following five indices: new orders, output, employment, suppliers’ delivery times and stocks of purchases.
An above 50 PMI reading indicates an increase compared to the previous month, while below 50 denotes a decline.
“The Filipino manufacturing sector showed a significant improvement at the end of the third quarter, as indicated by the latest PMI data,” S&P Global Market Intelligence economist Maryam Baluch said.
She said new orders increased at a much faster pace even as demand for Filipino goods dropped in international markets.
As a result, Philippine manufacturing firms boosted output at a strong rate.
“While weak international demand and supply chain issues will act as headwinds, robust domestic demand is expected to drive growth,” Baluch said.
Amid higher production needs, manufacturers increased hiring with the employment growth being the strongest since March.
Manufacturers also raised purchasing activity, posting its highest increase since January 2023.
While some of the purchases were used directly for production requirements, firms also expanded their inventories as they anticipate sales in the coming months and want to prepare for supply-chain disruptions.
As suppliers raised prices and given unfavorable weather events, price pressures picked up, affecting raw material costs.
“However, inflationary pressures remain historically subdued which supports the central bank’s recent decision to ease monetary policy,” Baluch said.
Last Aug. 15, the Bangko Sentral ng Pilipinas cut the target reverse repurchase rate to 6.25 percent from the 17-year high of 6.5 percent.
In terms of the outlook for the year ahead, manufacturers’ confidence level was at its highest since May as they expect demand to continue to improve and support further growth in production.
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