Filipino goods manufacturers ended 2024 with a solid performance, recording sharp increases in output and new orders, including orders from overseas, in December.
This marks the strongest growth in both output and new orders since April 2022, according to the latest Purchasing Managers’ Index (PMI) data from S&P Global.
The headline S&P Global Philippines Manufacturing PMI — a composite indicator of manufacturing performance — expanded for the 16th consecutive month in December with a reading of 54.3, above the neutral 50.0 mark and up from 53.8 in the previous survey period. This indicated a strong improvement in the health of the manufacturing sector and was the strongest since November 2017.
Robust demand trends
The sharp expansions in both new orders and output were supported by robust underlying demand trends, product diversification and new client acquisitions, S&P reported.
Additionally, demand from international markets rose once again, marking the first increase in new export orders in five months.
Other indications of the improved state of the manufacturing industry include the acceleration in purchasing activity to meet bigger production requirements.
Manufacturers exhibited a sharp spike in input buying activity, the strongest rate seen in nearly two years.
Moreover, producers resumed pre-production inventory building following two consecutive months of contraction. The rate of accumulation was the most pronounced since November 2022.
On the other hand, vendor performance continued to deteriorate sharply in December, although to a smaller degree than in November. The surge in purchasing activity strained supply chains, causing traffic and port congestion, explained the report.
Slight reduction in hiring
December data also observed a slight reduction in hiring practices after three months of continuous job creation.
“While production efficiency allowed manufacturers to stay on top of tasks at hand, it also led to a slight drop in employment, thereby ending a three-month streak of job creation. However, this could be a temporary blip, especially if demand remains resilient as anticipated throughout 2025,” said Maryam Baluch, economist at S&P Global Market Intelligence.
As for prices, suppliers handled the higher material costs by often passing them off to clients.
However, December highlighted a moderation in inflationary pressures, marking a shift from the spike observed in November. Consequently, charges were also raised at a slower and historically muted pace.
Lastly, firms remained confident that output would rise over the coming year amid hopes that demand trends would strengthen further and with plans to launch new products. However, confidence levels notably slipped to a four-month low.
