THE Philippine manufacturing sector grew strongly anew in November this year, buoyed by higher production and new orders for the month.
The country’s headline Purchasing Managers Index (PMI) rose in November to 54.2 from the 54 in October this year, signalling an improvement in the health of the country’s manufacturing sector.
The PMI is a composite index aimed to gauge 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.
Despite the improvement, the country’s manufacturing sector has still been outpaced by Vietnam during the month, whose PMI recorded a sharp increase to hit 56.5 during the month.
The Philippines’ s November PMI is the fourth consecutive month that the index has risen for the country.
David Owen, an economist from IHS Markit—the institution that compiles the PMI survey of the region—said the development is a strong indicator for growth in the last months of the year, but also warned of bumps ahead for the industry.
“Output growth remained sharp in the Philippines’s manufacturing sector during November, building confidence for stronger GDP growth in Q4. The headline Nikkei PMI strengthened even further from October, while production levels rose at the fastest rate in almost two years,” Owen said.
“On the flip side, export orders continued to decline, with the latest drop the quickest seen since the survey began nearly three years ago. Manufacturers were unfazed, though, as domestic demand was strong enough to offset the fall. Nonetheless, should the trend continue in line with the global trade slowdown, it may dampen output growth in the new year,” he added.
The economist further said that the weakening inflation rate and the dissipation of pressures from the recent tax reform law offer hope of a more “settled end” for the year for manufacturers.
He also cited the stronger peso as a positive development for the industry.
Following the Philippines in the monthly ranking is Myanmar with a PMI of 51.3, and Indonesia with 50.4.
Those in the contraction mode for the month were Thailand at 49.8, Malaysia at 48.2 and Singapore at 47.4.
Last month, the Philippine manufacturing sector earned the top spot in the region’s ranking of PMIs for October.
Image credits: Nonie Reyes