THE country’s manufacturing sector recorded its best performance in 8 months in November as higher demand pushed up new orders during the month, an international think tank reported.
In its report on the country’s Purchasing Managers Index (PMI), IHS Markit reported on Wednesday that the Philippines’s PMI hit 51.7 in November, up from the 51 PMI recorded in the previous month. This is the country’s highest PMI in eight months.
A country’s PMI is meant to gauge the health of its manufacturing sector. It is calculated as a weighted average of five individual subcomponents. Readings above 50 show growth in the industry while readings below the 50 threshold signal a contraction in the manufacturing sector.
The think tank said the expansion in new orders was central to the PMI uptick in November, with new sales rising for the first time since March. The report also noted that higher client numbers, increased footfall, and a general improvement in customer demand were the key drivers of growth.
“Latest PMI data continued to signal a recovery in operating conditions in the Philippines with the headline figure at an eight-month high. Supporting this was an expansion in new orders, which was the first uptick since the end of the opening quarter of the year. Output, meanwhile, fell at the softest pace in eight months and inched closer towards stability during November,” Shreeya Patel, economist at IHS Markit, said.
The report also noted stockpiling and efforts to boost production were a key theme in the latest PMI print for the country.
Despite the growth, the country’s PMI is still below the average in the region, which was at 52.3 in November.
Issues still linger
THE think tank also said that while the country’s PMI is above the 50-point growth threshold, several concerns must be addressed in the Philippine manufacturing sector.
The report said traffic issues, port congestions and difficulties sourcing materials influenced another deterioration in vendor performance during November.
“Supply-side issues and the lack of availability of raw materials weighed on production,” Patel said.
The continuing decline in work force numbers was another main concern for the sector.
The report said respondents often cited that voluntary resignations led to the decline, but firms also said they found it difficult to source skilled replacements.
“Voluntary resignations were also of concern, with headcounts falling continuously over the last year and a half,” Patel said.
“Encouragingly though, firms were able to keep backlogs at bay, suggesting that companies, for now, are dealing with labor shortages.”
Image courtesy of Roy Domingo