PH factory growth eased to 5-month low in January
Local factory growth fell to its lowest level in five months in January, although the pace of expansion in the beginning of the year nevertheless remained “solid” and could result in more jobs for Filipinos if sustained.
A monthly survey of around 400 companies showed the Philippines’ purchasing managers’ index (PMI)—a measure of the manufacturing sector’s health—eased to 52.3 in January from December’s 32-month high of 54.3, S&P Global said in a report.
While the latest print settled within the 50-mark that separates growth from contraction, S&P said the January PMI was the weakest reading in five months.
It was nevertheless a healthy expansion that beat the PMI readings of other Asean (Association of Southeast Asian Nations) countries. Zooming out, S&P said the growth momentum of factories in the region cooled in January to hit an 11-month low.
For Maryam Baluch, economist at S&P Global, 2025 is shaping up to be another strong year of growth for Filipino producers, which are out to catch the tailwinds from the expected surge in consumption during the election period.
“In fact, the anticipation of greater demand has already prompted goods producers to increase their inventory levels,” Baluch said.
Dissecting S&P’s report, demand for Filipino goods continued to post robust growth in January, with the acquisition of new clients driving up sales. However, the expansion of new orders eased from the previous month as the temporary boost from the holiday season begins to fade.
S&P said manufacturers would have posted a stronger growth if not for competition and costlier raw materials, which reportedly restrained production activity.
Survey data showed supply chains remained under pressure last month due to delays caused by shortages of delivery trucks and port congestion. At the same time, producers had to raise their selling prices due to heavier cost burdens.
But despite those challenges, expectations of fatter sales had prompted companies to focus on building their stocks of both pre- and post-production inventories. Notably, stocks of finished goods recorded a fresh increase following a sharp decline in December.
While growth in new sales encouraged some firms to hire more staff, S&P said this was offset by reports of resignations, resulting in a “stagnant” employment situation in the sector.
Moving forward, S&P’s Baluch said job generation could rise in the next months if demand conditions would stay solid.
