MANILA, Philippines — Philippine manufacturing growth eased to an eight-month low in April as softer demand and staff shortages affected production.
In a report released yesterday, S&P Global said the Philippines Manufacturing Purchasing Managers’ Index (PMI) stood at 51.4 in April, down from 52.5 in March.
This is the 15th consecutive month of growth in operating conditions across manufacturing firms in the country.
A PMI reading above 50 indicates growth, while below 50 denotes contraction.
The PMI reading is based on a survey of around 400 manufacturers, which considered the following: new orders, output, employment, suppliers’ delivery times and stocks of purchases.
“The start of the second quarter signaled a loss of momentum across the Filipino manufacturing sector. The headline PMI was at an eight-month low, with both new orders and output growing at much softer rates,” S&P Global Market Intelligence economist Maryam Baluch said.
She said the data showed a shift in demand patterns, with new export orders growing at the fastest rate in nearly two years and supporting the upturn in total new sales.
The growth in manufacturing firms’ new business slowed amid increased competition and softer demand.
Factory activity was also affected by resignations, which led to the third consecutive month of contraction in employment numbers across manufacturing firms in the country.
S&P Global said manufacturing firms cited difficulties in retaining staff.
Aside from staff shortages, manufacturing firms also experienced material scarcity and delivery delays that resulted in backlogs.
While firms’ operating expenses grew, Baluch said the pace of inflation in April was the weakest in two-and-a-half years.
“Reflecting softer hikes in cost burdens, manufacturers raised their selling prices at the slowest pace in 28 months,” she said.
Over the next 12 months, Philippine manufacturers expect to see growth as demand conditions improve.
“Looking ahead, manufacturers across the Philippines remained largely optimistic, as the degree of confidence in the year-ahead outlook for output reached a three-month high,” Baluch said, noting the degree of confidence, however, was weaker than the series average.
“Furthermore, our latest forecast expects growth in industrial production to moderate to five percent in 2023,” she said.
Commenting on the latest PMI data, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the easing trend on inflation and in global or local interest rate would support growth in manufacturing activities in the coming months, on top of the further reopening of the Philippine economy towards greater normalcy.