Factory activity rises slightly in February

MANILA, Philippines — Manufacturing activity picked up for the sixth consecutive month in February, fueled by improved demand conditions.

S&P Global said the Philippines’ manufacturing purchasing managers’ index (PMI) inched up to 51 in February from 50.9 in January.

The PMI is based on a survey of around 400 manufacturers and takes into account new orders, output, employment, suppliers’ delivery times and stocks of purchases.

An above-50 PMI reading means an overall increase compared to the previous month, while below 50 indicates a contraction.

S&P Global attributed the upturn in the manufacturing sector to the stronger increase in new orders as demand improved.

Growth in new orders was supported by the increase in new export sales, which marked the first month of improved foreign demand for Filipino manufactured goods since November last year.

“The start of the year was somewhat subdued for Filipino manufacturers, amid muted demand. However, in February, growth in new orders gained momentum, which in turn supported a fresh rise in employment and sustained growth in purchasing activity,” S&P Global Market Intelligence economist Maryam Baluch said.

February marked the first month of job creation since October 2023, as manufacturers increased their workforce count.

While demand improved, growth in output slowed, posting its weakest expansion in one-and-a-half years.

“The sector was held back by the severity of material shortages. Growth in production was only fractional, with firms chipping away at their holdings of inputs and finished items to meet order requirements,” Baluch said.

She said concerns on raw material shortages have affected the outlook for the year ahead, as manufacturers’ confidence weakened.

S&P Global said the level of positive sentiment observed in February matched that in October 2023 and was the lowest in 20 months.

For the coming months, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the easing headline inflation trend towards the central bank’s two to four percent target would be favorable for the manufacturing sector.