Factory activity picks up in September

MANILA, Philippines — The country’s manufacturing activity returned to expansion territory in September amid improved demand conditions, according to S&P Global Market Intelligence.

In a report released yesterday, S&P Global Market Intelligence said the Philippines’ manufacturing purchasing managers’ index (PMI) reading was at 50.6 in September, up from 49.7 in August.

A PMI reading above 50 indicates an overall increase compared to the previous month, while below 50 denotes a contraction.

The PMI figure, which is based on a survey of around 400 manufacturers, takes into account the following: new orders, output, employment, suppliers’ delivery times, and stocks of purchases.

“September PMI data signalled renewed growth across the Filipino manufacturing sector as new orders emerged out of contraction territory, thereby supporting a quicker expansion in output and a fresh rise in staffing levels,” S&P Global Market Intelligence economist Maryam Baluch said.

She said the growth in these three cases, however, remained subdued, indicating there is still weakness in the manufacturing sector.

Baluch also said the latest data suggests the growth in factory orders was driven by domestic demand, as export sales declined for the first time in nine months.

While manufacturing firms’ business requirements are rising and are expanding their workforce numbers, backlogs of work fell for the third month in September, and to the greatest extent in seven months.

As rising raw material, supplier and energy costs pushed up input prices, manufacturing firms passed on the costs to clients where possible, leading to the fastest rate of increase in selling prices in four months.

Baluch said both input prices and output charges, however, went up at historically muted rates.

“Global headwinds, including muted foreign demand conditions, weighed on overall growth in September, with mounting concerns regarding the sustainability of future demand reported by firms. Nonetheless, firms sought to expand staffing numbers despite signs of spare capacity amid hopes of further pick-ups in new orders,” she said.

Despite concerns on whether demand can be sustained, 40 percent of the surveyed firms still expect growth in output in the year ahead.