Factory activity eases in March

MANILA, Philippines — The growth in Philippine manufacturing activity eased slightly to 50.9 percent in March from 51 percent in February as production levels declined amid material shortages.

A purchasing managers’ index (PMI) reading above 50 means an overall increase compared to the previous month, while below 50 denotes a contraction.

Generated from a survey of around 400 manufacturers, the Philippines manufacturing PMI considers the following: new orders, output, employment, suppliers’ delivery times and stocks of purchases.

“The health of the Filipino manufacturing sector revealed some underlying concerns as the first quarter came to a close. Contributing to the somewhat mixed picture was a fresh fall in production levels, with companies attributing this to material shortages,” S&P Global Market Intelligence economist Maryam Baluch said.

She said the lower production level was seen even as there was sustained demand for goods.

“However, if firms are able to successfully secure materials and build their stocks, the downturn in output could be fleeting,” she said.

In terms of employment, the manufacturing sector registered an increase in jobs created for the second straight month.

As new orders picked up, firms also raised their buying activity.

As for prices, the data revealed that cost pressures have eased.

Some manufacturing firms cited moderated price hikes by suppliers to drive sales.

However, some manufacturers also cited increases in prices of raw materials due to the El Niño and material shortages.

As a result, Filipino manufacturers reduced selling prices for the first time in nearly four years.

For the year ahead, S&P Global said manufacturers in the Philippines continue to have an optimistic outlook on output.

Baluch said sentiment among manufacturers, however, weakened and was the least optimistic in nearly four years.

“Firms were concerned that increased market competition would limit growth prospects. However, hopes of demand conditions domestically and globally strengthening continued to buoy confidence levels,” she said.