The Philippine manufacturing sector moved to take advantage of the expected surge in demand during the holidays, as the country’s Purchasing Managers’ Index (PMI) registered the highest reading anew in Southeast Asia in November.
The Philippines’s PMI for November hit 54.8, up from the 53.7 PMI it registered in the previous month.
The local industry grew the fastest in Southeast Asia for the second consecutive month.
This was announced on Monday by regional business media organization Nikkei and
international think tank IHS Markit.
Malaysia trailed the Philippines with a PMI of 52. Myanmar followed at 51.6 and Vietnam at 51.4. Indonesia, meanwhile, hit a PMI of 50.4 and Thailand at 50. Only Singapore’s PMI went below the 50-point threshold at 47.4.
The PMI is a composite index, calculated as a weighted average of five individual subcomponents. Readings above 50 signal an improvement in business conditions on the previous month, while readings below 50 show deterioration.
Strong domestic demand toward the holiday season has pushed the surge in the country’s manufacturing sector, with IHS Markit economist Bernard Aw saying the strong performance could extend up to next month.
“A major driver of higher output has been solid domestic demand. The PMI’s gauge of new order volumes showed the recent expansion in sales accelerating in November, resulting in the largest monthly increase so far this year,” Aw said.
“Further rises in purchasing activity and inventories also point to the current expansion continuing and possibly accelerating in December,” he added. But while the economist said the Philip-pines’s strong PMI is an indication of strong growth in the economy, he warned of rising inflationary pressures associated with a weak exchange rate.
“A further rise in global raw-material costs, combined with a weak peso, will generate an unwelcome tightening of businesses’ profit margins,” Aw said.
The strong performance of the Philippines, nevertheless, mirrors that of the region’s, saying that the Asean manufacturing sector looks to finish the final quarter of 2017 with one of its strongest quarterly performances for over three years.
“The survey’s subindices also showed signs that the upturn will gain momentum in December,” Aw said.