The country’s manufacturing sector improved its performance at the start of the fourth quarter as its index score in the Purchasing Managers Index (PMI) recorded its fastest growth in seven months, according to the Standard & Poor’s (S&P) Global Market Intelligence.
On Friday, S&P Global Market Intelligence reported that the country’s PMI score improved to 52.4 in October, higher than the 50.6 recorded in September this year.
Maryam Baluch, Economist at S&P Global Market Intelligence, said the country saw improvements in new orders and output, the two largest components of the PMI.
“Operating conditions improved at the strongest pace in seven months. Moreover, increased workloads also supported growth in buying activity and employment,” Baluch said.
“Additionally, price pressures continued to fade signaling the easing of strong inflationary pressures seen for the most part of the last two years.”
S&P Global Market Intelligence reported that new orders were driven by an improved demand, which led to an uptick in sales. The report also noted that there was an increase in export orders, which was a reversal from a contraction in the previous survey period.
“With demand conditions strengthening, growth in production volumes quickened. Output rose for the 14th successive month in October. Moreover, the rate of increase was the fastest for five months,” the report stated.
Brisk sales encouraged firms to hire workers marking a two-month streak in the increase in job creation in the manufacturing sector. The report added that levels of unfinished work were depleted at the sharpest pace in nearly two years.
However, S&P Global Market Intelligence said the jobs created were marginal and similar to the level in September. Based on the data, S&P Global Market Intelligence said the employment October data still “signaled a fourth consecutive monthly fall in backlogs.”
The report also noted that Philippine manufacturers also said operating expenses rose in October, amid higher inflation recorded in raw material and energy costs. Nonetheless, the report said the increase in input price inflation was the slowest in four months and lower than the long-run average.
“Filipino manufacturers remained optimistic, with growth in output anticipated in the year ahead. However, global headwinds and the lagged effects of the monetary policy tightening remain a downside risk to the sector,” Baluch said.
The Bangko Sentral ng Pilipinas (BSP) last week hiked its key policy interest rates by 25 basis points to 6.5 percent to arrest the increase in the prices of goods and services.
The Monetary Board (MB), the BSP’s highest policy-making body, decided to raise the target reverse repurchase (RRR) rate by 25 basis points effective on October 27.
With the decision, the interest rates on the overnight deposit and lending facilities will be set at 6.0 percent and 7.0 percent, respectively, according to the BSP.
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