The Philippines’ manufacturing Purchasing Managers’ Index the month of September has slightly improved from August figure, but growth remains subdued.
IHS Markit’s Nikkei Philippine Manufacturing PMI report released Monday showed that production PMI in September stood at 50.8 from a record low of 50.6 in August.
The report said output volume last month grew at the weakest rate since the survey started in January 2016.
This is despite the modest sales trend and renewed growth in overseas orders.
The survey mentioned that the increasing costs of raw materials affected the production plans of firms.
“The weak peso continued to pose a problem for manufacturers. Not only did the cheaper currency fail to provide a boost to exports, it raised the costs of imports,” IHS Markit Principal Economist Bernard Aw said.
“Coupled with supply shortages due to bad weather, costs for manufacturing inputs, especially in industrial metal and paper, increased further. There were also reports of rising cost inflation affecting production levels,” added Aw.
Among surveyed countries in Southeast Asia, manufacturing growth in the Philippines only followed Vietnam with production PMI of 53.3 in the previous month.
IHS Markit manufacturing PMI report for September also noted that employment shrank for two consecutive months as the subdued growth of order book allowed firms to work through their backlogs.
“Despite the decrease in payroll numbers, capacity continues to be in abundance, which would weigh on hiring in the near future,” Aw noted.
Moreover, despite business confidence slipped in September, majority of the surveyed companies remained optimistic that their output will improve in the next 12 months due to new product launches, improving economic climate, marketing activity, and business expansions.
PMI is an indicator of manufacturing sector’s health based on sub-components such as new orders, output, employment, suppliers’ delivery times, and stocks and purchases.
Indices above 50 signal improvement in business conditions while readings below 50 show deterioration.