Local factories slow down in March amid pricey operating costs

MANILA, Philippines — Local factories slowed down in March as operating costs continued to turn expensive but some reprieve is on the horizon as inflationary pressures eased. 

A survey of around 400 manufacturers in the country found that the Philippines’ Purchasing Managers’ Index (PMI), a gauge of manufacturing output, grew at a softer clip of 52.5 in March from the 52.7 outturn in February, S&P Global said in a report on Monday.

The latest reading nevertheless settled above the 50-benchmark separating growth from contraction. S&P explained the softening in the March PMI marked the “the softest rate of expansion in seven months, the headline figure indicated a historically strong improvement in operating conditions.”

“The first quarter of 2023 concluded on a solid note, with a further expansion reported across the Filipino manufacturing sector, according to the latest PMI data. Both output and new orders rose at historically strong rates. Consequently, firms raised their buying activity to keep up with the growth in sales,” Maryam Baluch, economist at S&P Global, said in a commentary.

Supply chain bottlenecks, such as raw material scarcity, delivery delays, and expensive energy prices, pushed operating costs up, which continue to hamper production in local factories. 

Likewise, the latest PMI report showed that despite output rising for the seventh straight month in March, high input prices, port congestions and a new round of job cuts remain to be growth stragglers. 

The bright spots still remained in March, similar to those seen in February. New orders and projects, and a broader set of clientele managed to drive demand up as the latest PMI report showed.

As it is, a reopened domestic economy paved the way for the sector’s recovery from the pandemic. The latest PMI report noted the sector was upbeat as expectations for stronger demand in the coming months looked firmer as a result. — Ramon Royandoyan