The Philippine Manufacturing Sector Remains Steady at PMI 51.2 in August 2024

The Philippine manufacturing sector experienced steady growth in August 2024, according to S&P Global’s Manufacturing Purchasing Managers’ Index (PMI). The PMI held at 51.2, maintaining July’s performance and signaling stable business conditions across the sector. 

How the Philippines Compares Regionally

Based on the S&P report, among Southeast Asian countries, the Philippines ranked second with a PMI of 51.2, just behind Thailand’s 52. In contrast, Malaysia (49.7), Indonesia (48.9), and Myanmar (43.4) recorded contractions. Data for Vietnam and Singapore were unavailable at the time of reporting. 

The PMI is calculated based on a weighted average of several key indicators that reflect overall manufacturing conditions. These indicators include new orders (30 percent), production output (25 percent), employment (20 percent, supplier delivery times (15 percent), and stock levels of purchased items (10 percent). 

Domestic Demand Drives Growth, Inventory Levels Shift

A strong increase in domestic orders drove production levels to their highest in three months, according to the S&P report. However, weaker foreign demand led to the first decline in export orders this year. These trends influenced manufacturers’ inventory management, with pre-production stocks growing modestly, marking the slowest pace in six months. At the same time, post-production inventories decreased, reversing a five-month period of stock accumulation. 

Further, the report added that the Philippine manufacturers are projecting continued growth in production over the coming year, with the PMI anticipated to remain above the 50 threshold. Nonetheless, recent data from S&P Global indicates a slight decline in business confidence, suggesting that companies are adopting a cautiously optimistic outlook due to potential external challenges.