Toral: Philippine economy continues to expand amidst external pressures

DIGITAL REBEL 
SunStar Toral
SunStar ToralDigital Rebel

The latest Purchasing Managers Index (PMI) report for April 2024 highlights the continued resilience of the Philippine economy, marked by expansion across key sectors despite global uncertainties. The PMI, a vital economic indicator derived from monthly surveys of private sector companies, provides insights into the prevailing business conditions and economic trends. This is a joint project managed by the Philippine Institute for Supply Management and its advocacy arm, the Foundation of the Society of Fellows in Supply Management, along with I-Metrics Asia-Pacific Corp.

In April 2024, the composite PMI for the Philippines remained above the critical 50-point threshold, signaling ongoing expansion. The composite index registered at 51.7, a slight decrease from the previous month’s 52.0, indicating a marginal slowdown but still reflecting positive economic activity.

Manufacturing sector

The manufacturing sector's PMI stood at 50.9 in April 2024, down from 51.3 in March. This sector's expansion was driven by sustained domestic demand and improvements in supply chain conditions. However, the pace of growth moderated slightly due to external pressures such as global supply chain disruptions and fluctuating raw material prices.

The new orders index remained robust at 51.2, supported by domestic market strength, although export orders faced headwinds from international market uncertainties. The production index edged down to 50.7, reflecting a cautious approach by manufacturers amid fluctuating input costs.

Input prices rose with an index of 55.0, reflecting higher costs for raw materials and energy. Output prices also increased, albeit at a slower rate, with an index of 51.5.

Employment in manufacturing showed a marginal decline, with the employment index at 49.8, suggesting cautious hiring practices due to ongoing cost pressures. Supplier delivery times improved slightly, with the index at 52.1, indicating better supply chain efficiencies compared to previous months.

Services sector

The services sector posted a PMI of 52.5, slightly down from 53.0 in March. Despite the slowdown, the sector continues to show robust growth, driven by increased consumer demand and a rebound in tourism-related activities.

The business activity index stood at 52.8, buoyed by strong performances in information technology, financial services and hospitality sectors. New business inflows remained healthy, with an index of 53.0, reflecting sustained demand for services.

The employment index for services was at 50.2, indicating stable hiring practices as companies responded to increased demand. The backlog of work index rose to 51.5, suggesting that firms are experiencing higher levels of ongoing business.

The services sector saw input cost pressures with an index of 54.2, driven by higher wages and operating costs. Output prices increased slightly to 52.3.

Retail and wholesale

The retail and wholesale sector showed signs of recovery, with the PMI rising to 50.8 in April from 50.2 in March. This improvement was driven by increased consumer spending and inventory restocking activities.

The purchases index surged to 51.3, reflecting higher procurement activities in anticipation of future demand. Sales revenues improved, with the index at 50.5, signaling a positive trend in consumer spending.

Employment in the retail and wholesale sector remained steady, with an index of 50.0, indicating balanced hiring and workforce stability. Inventory levels were well-managed, with the index at 50.9, suggesting effective stock control strategies.

Cost pressures were evident, with input prices at 53.8. Retailers and wholesalers managed to pass on some costs to consumers, reflected in an output price index of 52.1.

Conclusion

The overall positive PMI readings across sectors reflect a cautiously optimistic outlook for the country's economic trajectory in the coming months.

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