The operating conditions of the country’s manufacturing sector has posted modest improvement at the end of 2021, according to a report released yesterday.
According to IHS Markit, the Philippines’ manufacturing purchasing managers’ index (PMI) rose fractionally to 51.8 in December from 51.7 in November, registering above the 50 no-change threshold that separates expansion from contraction.
“Although only modest, the latest uptick was the strongest in nine months, and broadly in line with the long-run series average,” the report said.
The report noted continued rise in new orders which encouraged companies to add to their input inventories for the fourth month running.
“As a result, firms raised their output expectations for the year ahead which improved to a near two-year high,” IHS Markit said.
However, it said there were still widespread reports of material scarcity and supply-chain disruption.
“The Philippines manufacturing sector remained in a solid position during the closing month of 2021, with the headline PMI at a nine-month high. Supporting this was an improvement in domestic demand and a slight uptick in output, the first for nine months. Firms were also optimistic that demand will continue to improve in the coming months and as a result prepared through advance ordering strategies,” Shreeya Patel, economist at IHS Markit, said.
“However, supply-side issues and virus-related restrictions threatened the sector once again. Delivery delays were pronounced and often hindered production. Shortages meanwhile continued to drive up expenses, despite some signs of a moderation in input and output prices in December,” Patel added.
Patel said looking ahead, the Omicron variant will almost certainly hit the Philippines’ manufacturing sector, “and in more ways than one.”
“Supply-side issues are likely to persist while case numbers and input price inflation could climb further as we head into the new year,” Patel said.