The Philippine manufacturing sector grew the fastest in the region in September, reports showed, as the country bucked a slowdown in Southeast Asia during the month.
International think tank IHS Markit announced on Monday the latest results of the Philippines Purchasing Managers’ Index (PMI) in the region, with the Philippines topping the list of the seven jurisdictions assessed by the think tank monthly.
Manufacturing conditions in the country improved at the end of the third quarter this year, with its PMI rising to 52 in September from the 51.9 recorded a month ago.
The PMI is a composite index aimed at gauging the health of the country’s manufacturing sector. It is calculated as a weighted average of five individual subcomponents.
Readings above the 50 threshold signal a growth in the manufacturing sector, while readings below 50 show deterioration in the industry.
IHS Markit Principal Economist Bernard Aw said the strong September print brought further signs of firm demand and likely signals a steady manufacturing sector in the coming months.
“In general, Filipino manufacturing firms are optimistic about the business outlook in the year ahead,” Aw said.
Survey data showed robust client demand, solid new business growth, adequate operating capacity to handle higher sales, lower backlogs, employment gains and higher input purchases.
These were tempered by a decline in export sales, lower foreign orders, lower input inventories and longer delivery times.
Aw said that while the local manufacturing sector remains steady, the threat of rising prices of consumer goods continues to cast a pall on the industry.
“September survey data suggest that growth in coming months is likely to be resilient, while strong cost inflation remains a key concern,” the economist said in a statement.
“On the inflation front, another steep rise in input costs saw firms raising selling prices at the second-fastest rate in the survey history during September,” he added.
Latest inflation data from the BSP showed inflation hit 6.4 percent in August this year, with the monetary board adjusting its 2018 inflation forecast upward to 5.2 percent, from the earlier 4.9 percent.
The Philippines’s 52 PMI is the fastest in the region, followed by Malaysia’s and Vietnam’s 51.5. Indonesia, meanwhile, comes fourth at 50.7, followed by Thailand with a PMI of 50.
In the contracting territory were Singapore with a 48 PMI and Myanmar at 47.5.
On average, the PMI of the region fell from 51 in August to 50.5 in September.
“The manufacturing upturn across Asean lost momentum at the end of the third quarter, with slower growth seen in both new orders and output. Export sales declined further,” Aw said in a statement.
Image credits: Nonoy Lacza