Metro Manila (CNN Philippines, November 2) — While the country’s manufacturing activity rose in October, a survey by IHS Markit shows this is not without factors such as material shortages hampering production.
The IHS Markit Philippines Manufacturing Purchasing Managers Index (PMI) stood at 51.0 during the month, slightly up from 50.9 in September. The highest since March’s 52.2, October’s reading is well above the neutral 50.0 value separating expansion from contraction.
IHS Markit economist Shreeya Patel noted the slight pick-up in growth for the Philippine manufacturing sector in light of the relaxation of some travel restrictions and new orders “stabilizing” after dropping for six months.
“However, the goods producing sector was yet again hit by delivery delays, material shortages and rising costs, which consequently inhibited output growth,” said Patel, noting these might stay for the next few months.
Surveyed manufacturers likewise cited raw material shortages and poor transport conditions as having led to “extensive” delays among vendors, with lead times getting longer each month since August 2019.
Firms also ramped up input purchases for the first time since July in a bid to secure raw material supply, noted IHS Markit. This stockpiling was driven by current pressures to acquire inputs along with increasing costs and expectations of greater demand, it added.
The UK-based information services provider also noted input prices climbed in October, with survey participants connecting the increase to material shortages such as metals, packaging materials and oil; and rising transportation and energy costs.
The survey also revealed that companies have still scaled back their worker numbers in October, but the decrease was milder than September’s.
“Firms mentioned that whilst there were some cost-saving efforts, resignations were mostly voluntary,” said IHS Markit.
Survey participants were more optimistic in October, with business confidence rising to a three-month high, it also said.
“Optimism was underpinned by hopes of greater international and domestic demand in the year ahead,” according to IHS Markit. “That said, sentiment was below the long-run series average.”
