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Production is expanding at the fastest clip in 5 months



Manufacturing Purchasing Managers' Index (PMI) of selected ASEAN economies, April 2024

By means of Beatriz Marie D. Cruz, News reporter

PHILIPPINE PRODUCTION Activity grew at its fastest pace in April FFive months, amid a surge in production and new orders, S&P Global said Thursday.

The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) rose to 52.2 in April from 50.9 in March, marking the strongest improvement in the sector. Ffive months or since the 52.7 value in November 2023.

A PMI reading above 50 indicates improved business conditions compared to the previous month, while a reading below 50 indicates a deterioration.

The Philippines’ PMI reading remained the second fastest among the six member states of the Association of Southeast Asian Nations (ASEAN) in April, just behind Indonesia (52.9) and ahead of Vietnam (50.3).

Myanmar (49.9), Malaysia (49) and Thailand (48.6) all saw contractions in industrial activity in April.

The Philippines’ PMI value was above the ASEAN average of 51.

“Building on the growth in the FIn the first quarter of the year, the Philippine manufacturing sector posted further gains in April,” Maryam Baluch, economist at S&P Global Market Intelligence, said in the report. “A faster pace of expansion was observed for new orders, which in turn led to a renewed and solid increase in production.”

New orders rose in April at the fastest pace since November 2023, according to S&P Global.

“Export market conditions also improved in April, with new export orders rising for the third month in a row and at the fastest pace Ffive months,” it said.

S&P Global said the pace of goods production growth was “solid” and the “most pronounced” in four months

“As production demands increased, hiring and purchasing activities remained in growth territory. In addition, stockpiling became more widespread in anticipation of greater future production,” Ms. Baluch said.

Manufacturers increased their purchases in April, the fastest pace in nine months, due to improved demand and increased production demands.

“Stronger inventories were also recorded among Philippine manufacturing companies, with pre- and post-production inventories accumulating at the fastest pace in 12 and 17 months,” the report said.

S&P Global noted that manufacturing jobs rose for the third straight month in April, although they declined from March.

“However, accelerated growth in new orders meant that pressure on capacity had increased, with some companies struggling to complete work. As a result, the latest pace of backlog clearance was marginal overall and the weakest since August 2023,” the report said.

S&P noted that slower-than-average cost growth meant most manufacturers kept costs unchanged month over month.

“Price data indicated a relatively subdued inflation environment, which is also likely to support growth in the coming months as companies were able to charge more competitive prices,” Baluch said.

a Business poll of 16 analysts emergedFInflation may have accelerated from 3.7% in March to 4.1% in April.

Manufacturers were “largely positive” over the next 12 months, with around a quarter saying there will be growth in production. However, confidence fell to the lowest level in four years, according to S&P Global.

The PMI measures a country’s manufacturing conditions based on the weighted average of FFive indexes: new orders (30%), production (25%), employment (20%), supplier delivery times (15%) and purchasing inventories (10%).

“(PMI) appears unaffected by inflation, with production costs, as measured by the Manufacturing Producer Price Index, falling 1% year-on-year in March, marking the third consecutive month of decline, although there there was a slight decrease. month-on-month increase of 0.3%,” Rob. Chief Economist of Security Bank Corpert Dan J. Roces said in a Viber message.

If the PMI reading continues to improve, Mr. Roces said he expects an upward trend for gross domestic product growth.

Emilio S. Neri Jr., chief economist of the Bank of the Philippine Islands, said stronger demand in the electronics and food processing sectors contributed to the rebound in factory activity.

“S&P’s survey is consistent with the recovery of Asian electronics exports, which happen to be one of the most important subsectors of the Philippines’ manufacturing industry,” he said in a Viber message.

“It is also possible that, despite higher input costs, the local food processing industry will continue to thrive given the strength of overall domestic demand, largely driven by favorable demographic developments and falling unemployment rates,” he added.

Oikonomia Advisory & Research, Inc. President and chief economist John Paolo R. Rivera said in a Viber chat that slowerFFactory activity may have boosted factory activity in April.

Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp., said the rebound in factory activity may be due to the higher number of working days in April compared to March.

“This is a sign of resilience despite and despite the still relatively higher interest rates that have increased financing costs/borrowing costs for manufacturers since 2022 due to higher prices/revenues.Flation,” Mr. Ricafort said in an email.