The Manila Times

PH factory output accelerates in May

BY NIÑA MYKA PAULINE ARCEO

DOMESTIC manufacturing conditions improved in May with a key measure rebounding from an eight-month low, S&P Global Market Intelligence reported on Thursday.

At 52.2, the Philippine purchasing managers’ index (PMI) rose from April’s 51.4. PMI readings above 50 indicate an expansion while those below point to a contraction.

“[T]he latest headline figure extended the current run of expansion to 16 consecutive months and posted above the average recorded over the series history to indicate a solid upturn,” according to an S&P

Global report.

Both new orders and output increased at faster rates following a loss in momentum during the previous survey period. Employment also grew at a modest pace after falling for three months in a row.

“The sustained uptick in new orders resulted in a turnaround in manufacturing employment,” it explained.

“Businesses expanded their hiring activity for the first time in four months, and at the strongest pace since October last year,” it added.

In addition, average lead times for the delivery of inputs improved in May.

“The degree of improvement was only fractional but marked the first month in which delivery times have shortened since July 2019,” S&P Global said.

Anecdotal evidence also suggested that the rise in new orders was fueled by improved demand conditions and the acquisition of new clients.

Foreign demand performed well with export volumes increasing steadily but at a little slower rate than in April.

Purchasing activity climbed for the ninth consecutive month in May with the growth rate in line with that recorded in April.

Firms acquired extra inputs to fulfill rising demand and manufacturing businesses were eager to increase inventory levels in anticipation of future demand.

Stocks of pre-production items also increased, prolonging a run that began in September 2021, and manufacturers also raised their holdings of produced items after consecutive months of depletion.

Maryam Baluch, economist at S&P Global Market Intelligence, said vendor performance improved in May for the first time in almost four years and that companies had attributed shorter delivery times to better logistical routes.

“[W]hile the latest data did signal a re-intensification of price pressures in May, rates of inflation were weaker that their historical averages,” she added.

“In terms of future output, firms remain largely upbeat, though confidence did take a slight hit and dipped to an 11-month low.”

However, S&P Global remarked that the overall improvement in delivery times was marginal despite continued concerns about material scarcity.

Firms said that high energy, material and supplier costs were transferred to clients in anticipation of sharper cost inflation, which led to input price and output charge inflation rates lower than their respective series averages.

Approximately 41 percent of respondents foresaw output increases in the next 12 months with an expectation that new projects and better demand would fuel development.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said that easing inflation may have led to the PMI improvement.

Inflation dropped to 6.6 percent in April following January’s 14-year high of 8.7 percent. The Bangko Sentral ng Pilipinas expects May inflation to have hit 5.8 to 6.6 percent.

Official data for the month will be released Tuesday next week.

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2023-06-02T07:00:00.0000000Z

2023-06-02T07:00:00.0000000Z

https://digitaledition.manilatimes.net/article/281818583215941

The Manila Times