FILIPINOS buying various goods kept the manufacturing sector afloat in September as the country’s Purchasing Manager’s Index (PMI) score bounced back to health, according to Standard & Poor’s (S&P) Global Market Intelligence.
The manufacturing sector’s PMI recovered to 50.6 percent in September from 49.7 percent posted in August, signaling an improvement in the growth of the sector.
However, the sentiment of the manufacturing sector in terms of whether this growth will be sustained slipped to a 15-month low. Only 40 percent of panelists anticipated growth in the output for 2024.
“Despite increasing material, fuel and supplier costs exerting pressure on operating expenses and pushing up selling prices at a faster pace, both input prices and output charges rose at historically muted rates,” Maryam Baluch, Economist at S&P Global Market Intelligence, said.
“Global headwinds including muted foreign demand conditions, weighed on overall growth in September, with mounting concerns regarding the sustainability of future demand reported by firms. Nonetheless, firms sought to expand staffing numbers despite signs of spare capacity amid hopes of further pick ups in new orders,” she added.
S&P Global Market Intelligence said the recovery in the manufacturing secttor’s growth in September was due to an increase in new orders.
The demand for various goods increased while factories raised their staffing levels. This marked the first time this occurred in four months.
However, preproduction inventories still fell in September, with companies often utilizing their stocks to meet current demand requirements. The latter was depleted at the fastest rate in nearly three years.
“The rate of growth remained historically subdued, thus suggesting some weakness still present within the sector. Moreover, latest data suggested that growth was supported by the domestic market as export sales fell for the first time in nine months,” Baluch said.
S&P Global Market Intelligence said despite the increase in workforce numbers, work backlogs remained high, marking the third copnsecutive month this occured.
This was also the worst in the past seven months. S&P Global Market Intelligence said its data suggested that there is still spare capacity within the sector.
Last month, the country’s manufacturing performance fell below the neutral 50 threshold at 49.7, the first contraction or below 50 since 2021.
Prior to this, the country’s PMI was above the 50-mark for 23 months or since September 2021. (Full story: https://businessmirror.com.ph/2023/09/02/amid-weak-demand-decline-in-factory-jobs-manufacturing-performance-dips-to-2-yr-low/).
Image credits: Roy Domingo