Factory activity hits over 3-year high in March (Sabong News)

Local manufacturers have raised output for the second successive month in March as businesses continued their recovery efforts from the Covid-19 pandemic, the latest survey from S&P Global showed. In a report Friday, April 1, the S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) rose to 53.2 last month from 52.8 in February. The headline index is above the 50.0 no-change threshold, and was the highest since December 2018. S&P Global noted the latest nutmeg “signalled a solid improvement in Filipino manufacturing sector operating conditions.” Latest survey data linked the easing pandemic restrictions earlier in the year to expansions in both new orders and output during March. In both cases, expansions were solid overall and above their respective long-run series averages. “Indeed, the demand for Filipino goods rose at the joint- fastest pace since July 2019, matching that seen in February,” S&P Global said. However, internationally the picture was negative. New export orders received by Filipino manufacturers declined in March, after expanding for the first time in seven months in February. The pandemic was a recurring reason for the latest downturn, although underlying demand conditions in external markets were reportedly subdued. Alongside the pandemic, geopolitical tensions in Eastern Europe added to the ongoing strain on the supply-side. “The war in Ukraine, Covid-19 cases rising in China, scarcity of materials and supply bottlenecks led to further worsening of supplier delivery times. Moreover, inflationary pressures reached record-highs as cost burdens and selling prices rose at faster paces,” Maryam Baluch, S&P Global, economist said. Shipment delays due to port congestion and high fuel prices reportedly led to intensified pressures on supply chains in March, as lead times lengthened to a greater extent than in February, S&P Global said. Amid material scarcity, rising fuel and energy costs, as well as supplier price increases, latest survey pointed to marked inflationary pressures across the Filipino manufacturing sector. “Overall, input costs rose at the fastest pace on record. Reflecting greater cost burdens, firms also hiked their selling prices at the fastest rate since the series began,” S&P Global said. Furthermore, with concerns regarding future input price increases, manufacturers purchased additional inputs in March in an effort to stockpile and protect their margins. In terms of employment, workforce numbers dropped again in March as firms reported resignations and some instances of cost-cutting initiatives. Nevertheless, backlogs of work fell, signalling an alleviation of capacity pressures. Finally, with pandemic restrictions easing and customer demand picking up, firms remained strongly positive regarding the outlook for output over the coming year. Where optimism was reported, some companies linked this to hopes of a positive election outcome.