The country’s manufacturing sector recorded a slower growth in December, according to a report released yesterday.
S&P Global said the headline Philippines Manufacturing Purchasing Managers’ Index, a composite single-figure indicator of manufacturing performance, fell from November’s nine-month high of 52.7 to 51.5 in December.
The headline index indicated only a modest improvement in operating conditions, and one that was the weakest in three months.
The report said central to the slowdown across the sector was a notable softening in new order growth.
“The rate of increase was the weakest in the current four-month period of expansion and modest overall,” the report said.
“Moreover, total sales growth was focused domestically as the demand picture across international export markets deteriorated, with manufacturers reporting a fresh and solid fall in new export sales in December,” it added.
Similarly, manufacturing output also expanded at a weaker rate.
“Despite easing to the slowest in three months, growth in output remained strong, in part supported by a sustained rise of new orders. A further rise in production requirements prompted a renewed rise in purchasing activity following the first fall recorded in 15 months during November,” the report said.
Firms also noted growing supply-side challenges with average lead times lengthening again in December, S&P Global said.
Congestion and longer delivery times for imports were blamed for delays.
Vendor performance likewise deteriorated at the greatest extent in five months.
“The main concern in the sector remains the further curtailment of workforce numbers. Evidence of spare capacity and a cooldown in new order growth prompted redundancies,” said Maryam Baluch, economist at S&P Global Market Intelligence.
“Moreover, export volumes fell for the first time in three months, and overall new orders growth was at a four-month low. Sluggish demand from overseas markets and tight borrowing conditions across the country will act as headwinds as we move into 2024. That said, inflationary pressures are expected to pose less of a threat than seen at the start of 2023, despite gaining pace during December,” Baluch added.
