Toral: Will Philippine manufacturing stay resilient in 2024?

Digital Rebel
Jannette Toral.
Jannette Toral.File

The Philippines solidifies its position as a key player in the Asean manufacturing landscape, showcasing a notable performance in its purchasing manager index (PMI). The PMI, a vital economic barometer, offers a comprehensive view of the economic state across manufacturing, retail-wholesale, and service sectors. The collaboration between the Society of Fellows in Supply Management, the Philippine Institute for Supply Management, and i-Metrics Asia-Pacific Corp. underscores the importance of this tool in reflecting the prevailing economic conditions.

On Dec. 2023, the nation’s PMI Manufacturing Index rose to 55.5, a 1.6-point increase, indicating a robust manufacturing sector and surpassing the previous month’s index of 53.9. Three neighbors of the Philippines in Southeast Asia lagged behind: Indonesia was at 52.2; Singapore, 50.5; and Vietnam at 48.9.

Philippine economic indicators

The Philippines achieved a substantial reduction in inflation to 3.9 percent in December 2023, in line with the Development Budget Coordination Committee’s forecast. This decline was attributed to lower inflation rates in sectors like housing, utilities and food. The gross domestic product or GDP forecast for 2024 is projected to be between 4.6 percent and 7.5 percent, indicating a range of optimistic economic outlooks.

PMI composite index; broader economic implications

The composite index for December 2023 was 54.61, with an annual mean of 52.51. This resilience, despite global economic challenges, is notable, as the index has consistently stayed above the 50-point mark, indicating expansion. The quarter-on-quarter comparison also reflects ongoing expansion, with a notable increase in the index from third quarter to fourth quarter in 2023.

Detailed analysis of the manufacturing sector

The PMI manufacturing index’s increase to 55.54 in December 2023, surpassing the annual mean of 52.58, showcases the sector’s resilience and growth. The 186-month trend since July 2008 has predominantly been in expansion, with 165 months of growth.

December 2023 saw significant production growth and a recovery in employment indices, while new orders and lead times indicated heightened demand and supply chain adjustments. The year-on-year comparison for December 2023 shows robust growth in production and stable new orders, with slight adjustments in inventory levels and employment. The overall PMI rose from 54.50 in 2022 to 55.54 in 2023. This further confirms the sector’s positive momentum.

Business expectations; supply chain dynamics

The manufacturing business expectation for January 2024 suggests continued expansion, albeit at a slower pace than the previous month. The supplier deliveries index for December 2023 grew, indicating slower delivery performance, a sign of increased demand.

Price, cost watch

The average price charge in December 2023 decreased, aligning with a slight decline in production costs. This shift might indicate rising cost pressures, necessitating strategic pricing and cost management to maintain profitability.

In conclusion, the Philippines’ manufacturing sector’s performance as of December 2023 stands as a testament to its economic resilience and growth potential within the Asean context. The comprehensive PMI data, coupled with the nation’s favorable economic indicators, paints a picture of a robust and adaptable manufacturing landscape, poised for continued growth and stability in 2024.


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