DESPITE the decline in unfinished work and the reduction in buying activity, the country’s manufacturing sector saw its Purchasing Managers Index (PMI) score inch up in November, according to Standard & Poor’s (S&P) Global Market Intelligence (GMI).
Based on the S&P Global Philippines Manufacturing PMI, the country’s composite index score slightly improved to 52.7 in November from the 52.4 posted in October. This was amid the decrease in purchasing activity in November, the first time in 15 months or since mid-2022, according to S&P GMI.
“While these fresh contractions were a slight cause for concern, the downturns were shallow overall and may be reversed if growth momentum is sustained, although global headwinds and sluggish demand from overseas markets could act as downside risks in the coming 12 months,” S&P GMI Economist Maryam Baluch said.
S&P GMI also said there were also higher raw material prices during the month and “concerns of overstocking dissuaded input buying at some firms.”
“Some businesses continued to purchase inputs amid growing input requirements, thereby helping to offset the overall downturn,” the think tank said.
It also noted that stocks of purchases expanded for the second month running, although the rate of increase was modest and weaker than in October.
S&P GMI attributed the growth in inventories on manufacturing firm’s efforts to hold on to inputs to save on costs.
Further, the think tank said there was a modest reduction in manufacturing employment marking a fresh contraction in growth.
This was mainly due to the decline in backlogs, the fifth consecutive month preventing manufacturing firms from hiring more staff.
Nonetheless, S&P GMI said the growth of new businesses may lead to the manufacturing sector’s increase their intake of workers.
“Filipino goods producers remained optimistic, with just under half of respondents [46 percent] predicting an expansion in output in the coming 12 months. While this marked an improvement since October, confidence levels were still historically subdued,” the think tank said.
Meanwhile, S&P GMI said vendor performance worsened in November. This was due to material shortages and port congestions.
There were reports of higher material and supplier costs which were largely blamed for the latest rise in cost burdens.
The think tank said with other price pressures remaining muted, the rate of input price inflation was the weakest recorded in over three years, resulting in a slight uptick in manufacturers’ selling prices.