By Aubrey Rose A. Inosante, Correspondent
PHILIPPINE manufacturing performance concluded 2024 on a positive note as growth in December represented the quickest pace since November 2017, attributed to a rise in production and fresh orders, according to S&P Global’s report released on Thursday.
The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) increased to 54.3 in December from 53.8 the month prior.
This matched the April 2022 figure and was the most significant enhancement in operational conditions since the 54.8 score in November 2017.
A PMI measurement exceeding the 50 benchmark indicates an enhancement in operational conditions, whereas a score below 50 indicates a decline.
“The Philippine manufacturing sector wrapped up 2024 on an encouraged note, with further progress in demand leading to steep and considerable growth in fresh orders and production,” Maryam Baluch, economist at S&P Global Market Intelligence, stated in the report.
December’s PMI score for the Philippines was the highest among six members of the Association of Southeast Asian Nations (ASEAN). It surpassed Thailand (51.4), Indonesia (51.2), and Myanmar (50.4).
A decline in production activity was recorded in Vietnam (49.8) and Malaysia (48.6).
S&P Global noted in its report that output and new orders “positively influenced” the Philippines’ PMI score in December.
“Significant expansions in both new orders and production were noted, bolstered by anecdotal reports of strong underlying demand trends, product diversification, and acquiring new clients,” the report indicated.
A resurgence in demand from international markets led to the first increase in new export orders in five months, according to S&P Global.
An upsurge in production demands led manufacturers to boost purchasing activities, with input procurement increasing at the highest rate in almost two years.
“A continued increase resulted in a return to pre-production inventory accumulation, after two consecutive months of decline,” it mentioned.
S&P Global reported that vendor performance sharply declined in December, though at a slower pace compared to November.
“The rise in purchasing activities put pressure on supply chains, leading to traffic and port congestion, as indicated by panelists,” it stated.
Manufacturers reduced workforce numbers in December, ending a three-month trend of hiring.
“While productionefficiency allowed manufacturers to manage current tasks effectively, it also resulted in a slight reduction in employment, thus concluding a three-month phase of job creation. Nevertheless, this may be a temporary situation, particularly if demand continues to be robust as expected throughout 2025,” Ms. Baluch articulated.
S&P Global pointed out that rising costs for materials and suppliers were transferred to clients, although data evidenced a reduction in inflationary pressures.
“December showcased a moderation in inflation, representing a shift from the surge seen in November. Indeed, cost pressures and output prices increased at historically subdued levels,” Ms. Baluch commented.
Manufacturers maintained a hopeful perspective for 2025, even though confidence levels dipped to a four-month low.
“Companies remained hopeful that output would improve in the coming year, buoyed by expectations for stronger demand trends and plans for new product launches,” S&P Global remarked.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort pointed out that manufacturing activity surged in December due to the “peak demand across many sectors during the fourth-quarter holiday season.”
“The quicker manufacturing PMI figures would be a promising sign for the Philippine economy that could potentially lead to accelerated GDP (gross domestic product) growth, as one of the foremost economic indicators,” he opined.
In an email message, Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco mentioned that the Philippines continued to excel in manufacturing within the region.
The Philippines’ PMI score surpassed the ASEAN average of 50.7 in December. For 2024, the ASEAN PMI average was 51.
He emphasized that the manufacturing PMI for ASEAN was “weaker than expected, although the overall downturn was primarily driven by the bloc’s more advanced members facing challenges at the end of last year.”
Mr. Chanco observed that the ASEAN PMI statistics imply that manufacturing activity should remain stable in the short term.
In a separate report, S&P Global noted that manufacturing companies in the ASEAN region were optimistic about the forthcoming year, even though the level of confidence slipped to the lowest in eight months.
“While the outlook for output in 2025 remains favorable, it has slightly moderated. Growth in new orders continues to be modest and strongly depends on domestic demand, while weak international demand persists as a growth hinderance,” Ms. Baluch remarked.
