PH posts highest PMI in Nov ’17

MANILA -- The Nikkei Manufacturing PMI (Purchasing Managers’ Index) jumped to 54.8 in November from 53.7 in the previous month, its highest reading for this year, according to IHS Markit’s Philippines

In its survey released Friday, the increase in PMI last month was due to solid expansions in new orders, rising the most in a year.

Production also grew significantly, expanding at the fastest pace since May. On the price front, cost increases were sharp, rising at the fastest rate since March as imported raw materials became more expensive.

“A major driver of higher output has been solid domestic demand. The PMI’s gauge of new order volumes showed the recent expansion in sales accelerating in November, resulting in the largest monthly increase so far this year,” IHS Markit Principal Economist Bernard Aw said.

“Further rises in purchasing activity and inventories also point to the current expansion continuing and possibly accelerating in December,” Aw added.

He added that some sub-indices suggest higher growth this month due to higher demand.

The report said that in response to greater production demand, firms increased their workers in November.

“Additional manpower enabled companies to work through their increased workloads, resulting in a further decline in backlogs of work,” the survey read.

Likewise, companies also accelerated their purchasing activity last month to meet future demands.

Companies replenished their stocks and built up buffer in the previous month as greater demand is expected.

But it was noted that inflationary pressure remained strong in November.

“Robust economic activity has been marred by rising inflationary pressures, commonly associated with a weak exchange rate. As such, higher prices remain an area of concern that policymakers need to watch closely. A further rise in global raw material costs, combined with a weak peso, will generate an unwelcome tightening of businesses’ profit margins,” Aw explained.

Meanwhile, business outlook for Filipino producers remained optimistic in the months ahead.

“The Philippines manufacturing economy is on course to end the year with its strongest quarter for 2017, with business conditions improving further during November,” Aw said.

“The PMI suggests the strong growth momentum in the Filipino economy has some way to go,” he added. (PNA)