Despite a solid rise in cost burdens, many firms looked to keep prices unchanged in order to maintain a strong market environment.

Although business conditions showed a slight improvement, the country’s manufacturing sector performed better in October, latest results from IHS Markit’s Purchasing Managers’ Index (PMI) show.

“The IHS Markit Philippines Manufacturing PMI increased from 52.1 in October, up from 51.8 in September to reach the joint-highest reading observed for nine months (level with July), and signaling a moderate improvement in the health of the goods-producing sector,” the survey said.

According to IHS Markit, this development may be attributed in part to the slight acceleration in manufacturing output and new orders for the month.

The think tank noted that despite accelerating new orders and solid increase in production, the expansion proved softer in October and weaker than the survey average since January 2016.

IHS Markit economist David Owen explained that despite the slight uptick in the country’s manufacturing performance, this only amounts to little in terms of the improvement in business operating conditions.

“Posting at 52.1 in October, the IHS Markit Philippines Manufacturing PMI signaled little change in the rate of improvement in operating conditions from September. Production expanded at a slightly quicker rate, alongside a marginal uptick in the pace of new order growth,” Owen said.

“On the other hand, employment rose at a slower rate, while stock of purchases grew to the least extent for three months,” he added.

According to him, what stands out from the October data was the further deceleration in output charge inflation growth, which was at its lowest point since January 2016.

“Despite a solid rise in cost burdens, many firms looked to keep prices unchanged in order to maintain a strong market environment,” the economist said.

“Business expectations dropped to the lowest in the series history. However, with a good proportion of firms still expecting activity to rise in the year ahead, the overall outlook remained positive,” he concluded.