Factory activity slows in January

MANILA, Philippines — Manufacturing activity in the country rose at a slower pace in January due to cooling demand.

In a statement yesterday, S&P Global said the Philippines’ manufacturing purchasing managers’ index (PMI) declined to 50.9 last month from 51.5 in December last year, slowing for the second straight month.

Based on a survey of around 400 manufacturers, the PMI is an indicator of manufacturing performance and covers new orders, output, employment, suppliers’ delivery times and stocks of purchases.

A PMI reading above 50 indicates an overall increase compared to the previous month, while below 50 denotes an overall contraction.

“The turn of the year revealed a slight weakness in demand conditions, as new orders and output growth eased,” S&P Global Market Intelligence economist Maryam Baluch said.

S&P Global said orders posted the weakest pace of growth in five months as demand softened, particularly from overseas markets.

Production levels eased for the second successive month and registered the slowest pace of growth since August last year.

While new orders and output posted slower increases, manufacturers’ purchases of inputs rose for the second successive month in January and at the strongest pace in six months.

S&P Global said manufacturers were able to build their stocks of purchases in January even as vendor performance deteriorated due to material shortages and port congestion.

In terms of employment, manufacturers maintained staffing levels, following declines seen in the previous two survey rounds.

“Looking forward, global headwinds and sluggish demand from external markets, especially China, are likely to weigh on the Filipino manufacturing sector,” Baluch said.

She said the increased buying activity and building of stocks, however, show manufacturers are anticipating continued growth in the coming months.

Nearly half of the survey respondents expect growth in output in the next 12 months.

“Historically subdued inflationary pressures will also assist the sector, as firms seek to price competitively,” Baluch said.