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Wednesday, April 24, 2024

Factory output on rebound in May

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THE Philippines’s Purchasing Managers’ Index (PMI) rebounded in May, snapping three consecutive months of slowdown as factory orders and manufacturing output posted “quicker” expansions, according to Standard & Poor’s (S&P) Global.

In its latest report, S&P said the country’s PMI improved to 52.2 from the eight-month low of 51.4 recorded in April.

“The headline S&P Global Philippines Manufacturing PMI—a composite single-figure indicator of manufacturing performance—signaled a quicker improvement in operating conditions across the Philippines goods-producing sector,” it said on Thursday.

“Moreover, the latest headline figure extended the current run of expansion to 16 consecutive months and posted above the average recorded over the series history to indicate a solid upturn,” it added.

S&P Global Market Intelligence economist Maryam Baluch said the improvement in the Philippines’s manufacturing sector was supported by a “solid” rise in both output and factory orders, with firms “also expanding their workforce numbers for the first time in four months.”

“More encouragingly, vendor performance improved in May for the first time in almost four years. Companies reported that improved logistics routes helped shorten delivery times.”

S&P Global Market Intelligence economist Maryam Baluch

Citing anecdotal evidence, S&P said the increase in new orders was driven by “stronger” demand conditions and acquisition of new clients.

“Demand from foreign markets also fared well in the latest survey period, with export volumes growing solidly, albeit at a slightly softer pace compared to April,” it said.

The S&P report also indicated that the average lead times for the delivery of inputs in the country’s manufacturing sector improved in May.

“The degree of improvement was only fractional but marked the first month in which delivery times have shortened since July 2019,” it said.

S&P added that buying activity increased in May for the ninth consecutive month “with the rate of growth broadly in line with that seen in April.”

“Firms purchased additional inputs to meet growing demand. Moreover, in anticipation of future demand, manufacturing firms were keen to raise their inventory levels,” it said.

“Stocks of preproduction items rose further, thereby extending the current sequence of growth seen since September 2021, while manufacturers also raised their holdings of finished items following back-to-back months of depletion,” it added.

S&P said Filipino goods producers remained “broadly” optimistic regarding the growth in manufacturing output, as they “anticipate expansions in production in the coming 12 months.” The optimism stemmed from hopes that “new projects and stronger demand” will drive manufacturing growth.

“However, the degree of confidence moderated to an 11-month low and remained historically subdued,” S&P said.

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