Slumping no more, local factory output jumps to 8-month high in November

MANILA, Philippines — More finished products came out of local factories in November, pushing up output growth to an eight-month high as more-relaxed pandemic restrictions stoked greater client demand.

A monthly survey of around 400 companies showed the country’s purchasing managers’ index (PMI), a measure of manufacturing output, inched up to 51.7 in November from 51 in the previous month, British information provider IHS Markit reported Wednesday. Data showed the November figure was strongest in eight months.

While the increase was marginal, the latest reading landed above the 50-mark separating expansion from contraction. Shreeya Patel, economist at Markit, said the latest print “continued to signal a recovery in operating conditions” in the Philippines, as factory output “inched closer towards stability”.

Survey results showed Filipino manufacturers witnessed orders increase last month, a first since March when manufacturing was hampered by a round of strict lockdown at the time to curb a sudden spike in infections. Markit said three factors propelled this growth: higher client numbers, increased footfall, and improving customer demand.

But in the survey’s history, the sales growth in November was still relatively “subdued”, Markit explained, indicating that local factories are not out of the woods yet.

According to companies polled, production declined for the eighth straight month in November, although the slump was milder compared to previous months. Factories reported delays in receiving raw materials, which have also become costlier as prolonged lockdowns continued to cripple the delivery of supply.

At the same time, manufacturers are also experiencing a labor crunch that’s compounding production problems. Last month, companies said their headcount fell anew — albeit “at the softest pace for four months” — mainly due to “voluntary resignations” and difficulty in finding skilled replacements. But despite the shortage in manpower, factories managed to “sharply” reduce their backlogs as employees worked overtime to complete new orders.

Moving forward, Markit said manufacturers are counting on looser restrictions to sustain demand recovery. “Stockpiling and efforts to boost production were a key theme in the latest release,” Patel, the economist from Markit, said.

“On the COVID-19 front, low vaccination rates remain one of the sectors largest threats. The Philippines government nevertheless remains committed to inoculating the population before the end of 2022,” she added.