Manufacturers showed mixed sentiments as IHS Markit’s Philippine Manufacturing Purchasing Managers’ Index (PMI) fell between August and September.
“Whilst business expectations were positive, they were also the least-optimistic on record.
Trade fears were often behind negative forecasts, while firms maintaining a hopeful outlook commented on new clients and expected sales growth,” IHS Markit said.
Compiled by IHS Markit from responses to monthly questionnaires sent to purchasing managers in a panel of around 400 manufacturers, this new round of survey showed that businesses were encouraged by a solid rise in total new orders, despite overseas demand falling at the quickest rate seen in the series history so far.
“However, difficult trading conditions led to a dampened one-year outlook, while employment and purchasing activity growth also slowed,” it said.
The IHS Markit Philippines Manufacturing PMI fell fractionally to 51.8 in September, from 51.9 in August, signaling what it said was “a moderate and weaker-than-average improvement in operating conditions across the manufacturing sector.”
It was also the lowest recorded since June.
Production growth slowed for the third month running, as latest data indicated a moderate uplift in output at Filipino manufacturers. The expansion was mainly attributed to higher sales, although some firms were helped by upcoming trade fairs.
“In contrast to the trend for output, new orders increased at a sharper rate than in August.
Companies noted a stronger performance in domestic markets over the month, as client orders grew in size. At the same time though, sales to overseas customers fell for the fourth month in a row. Moreover, the latest decline was the quickest in the series history (beginning in January 2016),” it said.
Employment at manufacturing firms meanwhile went up marginally in September, as the rate of hiring activity softened from August’s recent high. The increased labor requirements were offset by resignations at a number of companies.
“Backlogs of work meanwhile fell at a sharp and accelerated pace,” it said.
Purchasing activity growth also slowed over the month, in part due to a slightly weaker expansion in output, contributing to a subdued rise in pre-purchased goods inventories, while stocks of finished goods also expanded at a marginal rate.
“At the same time, firms noted another lengthening of delivery times, as poor weather conditions persisted and led to worsening traffic issues. That said, improvements from other suppliers meant that the overall deterioration was only fractional,” IHS Markit said.
IHS Markit also said output charges set by Filipino goods producers increased at the slowest rate since June 2017.
“Firms related the uptick to greater cost pressures. However, some panelists highlighted that lower prices at competitors caused them to reduce their charges,” it said.
“The rate of input price inflation meanwhile accelerated, indicating the quickest increase in cost burdens since February. Higher raw material prices were often reported to have been behind the latest rise. Notably, some respondents found that a shortage of materials led some suppliers to raise their fees,” it added.
The IHS Market Philippine Manufacturing PMI survey is collected in the second half of each month and indicates the direction of change compared to the previous month.
The September data were collected between September 12 and 23. (R. Castro)