Philippine Manufacturing Hits Five-Month High in April, Signaling Robust Sector Growth

April 2024 has marked a significant uptick in the Philippine manufacturing sector, achieving its most considerable growth in the past five months. This resurgence is primarily driven by increased output and a surge in new orders, according to the latest findings from the S&P Global survey.

Accelerated Growth and Expanding Orders

The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) for April stood impressively at 52.2, a rise from 50.9 in March. This index measures the economic health of the manufacturing sector, with any score above 50 indicating expansion. This growth is not only a continuation of the positive trends seen in the first quarter but an indication of an accelerating pace.

Maryam Baluch, an economist at S&P Global Market Intelligence, highlighted the significant factors contributing to this growth: “A quicker rate of expansion was observed for new orders, which in turn triggered a renewed and solid rise in production. Additionally, business from overseas markets also expanded at a stronger rate,” she explained.

Significant Highlights in New Orders and Exports

The sector saw new orders growing at their fastest rate since November 2022, with new export orders increasing for the third consecutive month—and at the quickest pace in five months. The boost in new work, which posted the most substantial gain in four months, has led to increased purchasing activities among manufacturers.

Supply and Employment Trends

Manufacturers ramped up their purchasing efforts, experiencing the quickest upturn in nine months, motivated by favorable demand conditions and heightened production requirements. This trend has also led to a significant accumulation of pre-production and post-production stocks, the fastest in 12 and 17 months, respectively.

While employment continued to grow, the pace slightly eased from March, with some firms reporting challenges in completing work on hand, which has slightly weakened the backlog depletion rate since August 2023.

Price Stability and Future Outlook

Price charges remained broadly unchanged from March, with the survey noting only modest overall input price inflation. Looking ahead, the sentiment within the manufacturing sector remains largely positive, with nearly a quarter of surveyed businesses anticipating growth in production. However, it’s noteworthy that the degree of confidence has dipped to a four-year low, suggesting some underlying concerns about future growth.

Implications and Expectations

The data collected in the second half of April, encompassing responses from around 400 manufacturing purchasing managers, offers a detailed snapshot of the sector’s health and trajectory. As the Philippine Statistics Authority (PSA) prepares to release official manufacturing figures on June 7, 2024, stakeholders and analysts will be keen to see if these positive trends continue to reflect in broader economic indicators.

This robust performance in the manufacturing sector is a hopeful sign for the Philippine economy, suggesting resilience and potential for sustained growth amid global economic fluctuations.