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MANILA— Anticipating increase in demand for the last quarter of the year, the country’s manufacturing purchasing managers’ index (PMI) regained its strength in October after two months of almost flat growth.
IHS Markit Manufacturing PMI for the Philippines in October rose to 53.7 from 50.8 in September.
“After two months of marginal growth, there was a flurry of activity in the Philippines manufacturing sector at the start of the fourth quarter. Demand for Filipino manufactured goods strengthened noticeably, with order book growth picking up to a five-month high,” IHS Markit Principal Economis Bernard Aw explained.
This also made the Philippines to top other ASEAN member states in the survey as Vietnam posted a production PMI of 51.6; Singapore at 51.3; Myanmar at 51.1; Indonesia at 50.1; Thailand at 49.8; and Malaysia at 48.6.
The Philippines’ manufacturing score last month was also higher than the ASEAN average of 50.4.
The monthly report has also attributed the growth in manufacturing PMI to the availability of capital equipment which boosted production capacity of Philippine factories.
Moreover, higher employment was also recorded last month.
“Greater demand lifted production volumes, which in turn prompted firms to hire more workers,” Aw said.
The IHS Markit report added that business confidence in the Philippines remained elevated despite optimism fell to its lowest since the survey started in January 2016.
Among the concerns of companies include shortage of raw materials and the inflationary pressures due to peso depreciation.
“Further weakening of the peso poses a problem for manufacturers, especially those that rely on imported inputs for production. Input cost inflation picked up sharply, which led firms to raise prices in order to preserve profit margins,” Aw said.
“Charges for Filipino goods increased at the fastest rate on record. This signals that inflationary pressures are building in the Philippines, suggesting that consumer inflation may trend above BSP’s inflation expectations. That will compel the central bank to consider tightening monetary policy as early as this year,” he added.
But local companies are still optimistic about higher sales forecasts, marketing activity, new models and planned business expansions.