The country’s output index continued to increase in March and hit the highest score for the first quarter of the year, a Purchasing Managers’ Index (PMI) survey by IHS Markit showed Monday.
The Nikkei Philippines Manufacturing PMI in March recorded a production score of 53.8, higher than the 53.6 index in February and 52.7 in January.
The survey attributed the strong manufacturing index to the solid pace of growth of total book order last month.
It added that expansion projects of production facilities here also contributed to the manufacturing PMI growth in March.
“The March survey points to a further strengthening in the rate of expansion of the Philippines’ manufacturing sector, which bodes well for economic performance in the first quarter. Growth is being driven mostly by robust domestic demand, stemming from buoyant consumers and public infrastructure spending in particular,” said IHS Markit economist Bernard Aw.
The PMI survey noted that manufacturing companies are facing greater production requirements, which led to the hiring of more workers last month.
The country recorded a four-month high employment index in March, it said, adding that companies’ increment in workforce is also pushed by their planned business expansions.
Moreover, firms have increased the purchasing level of their inputs last month, anticipating the rise in demand and price hike due to the depreciation of the Philippine peso.
“The weaker exchange rate means that prices for imported inputs continued to be more expensive than before. Firms were able to pass on much of the higher costs to customers as demand for Filipino goods remains strong,” Aw noted.
He also mentioned that the country’s manufacturing PMI is expected to grow, supported by strong spending from both public and private sectors.
“However, the manufacturing sector was not performing as well in the first quarter as it had in the fourth quarter of last year,” he said.
Meanwhile, Philippine manufacturing PMI was the second strongest in Asean for the month of March, next to Vietnam, which gained a score of 54.6.
Following the Philippines were Myanmar with an index of 53.1, Indonesia with 50.5, Singapore with 50.4, Thailand with 50.2, and Malaysia with 49.5.
PMI is an indicator of the manufacturing sector’s health based on sub-components, such as new orders, output, employment, suppliers’ delivery times, and stocks and purchases.
Indices above 50 signal improvement in business conditions, while readings below 50 show deterioration.