As the Philippines strides into 2024, the economic landscape reflects our resilience and challenges, intricately depicted through the Purchasing Managers’ Index (PMI) data for January. Spanning across the manufacturing, retail-wholesale, and services sectors, the PMI surveys offer a lens into the vibrancy and vulnerabilities of the economy.
PMI Philippines is a collaboration between the Society of Fellows in Supply Management, the Philippine Institute for Supply Management, and i-Metrics Asia-Pacific Corp. It is an economic barometer that offers a comprehensive view of the economic state across manufacturing, retail-wholesale, and service sectors reflecting the prevailing economic conditions.
Economic performance: A sectoral overview
January’s Composite Index, while remaining above the pivotal 50 threshold, indicates a deceleration across the board. The manufacturing and services sectors showed a slowdown, with retail-wholesale contracting at an accelerated pace. This collective deceleration contributed to modest growth in the composite index, a trend anticipated due to seasonal downturns post-holiday season.
Global growth forecasts for 2024 hover around 3.1 percent, with a slight uptick expected in 2025. Despite this, the projected growth falls short of the pre-2020 average, hindered by high central bank policy rates, fiscal support reduction, and low productivity growth. Inflation rates are downward, thanks to resolved supply-side issues and restrictive monetary policies.
PMI Philippines Composite Index: A closer look
The Philippines’ Composite Index for January 2024 experienced a notable dip, reflecting the expected seasonal slowdown. However, the manufacturing sector, tracked since July 2008, and the retail-wholesale sector, observed since April 2009, along with the services sector, monitored from October 2010, all contribute to a broader understanding of the economic dynamics at play.
Manufacturing sector insights
Despite its expansion, the manufacturing sector reveals a slowdown, with the index dropping by 3.06 points to 52.48. This sector’s resilience is evident, with a consistent expansion noted in the majority of the 187 months tracked.
Retail-wholesale sector observations
The retail-wholesale sector, on the other hand, contracts faster, with the index decreasing by 1.89 points to 47.57. This contraction, especially in demand-related variables like purchases and sales, underscores the sector’s challenges in sustaining growth.
Services sector analysis
The services sector, while expanding, also exhibits a slowdown, with the index decreasing by 4.06 points to 51.98. This sector’s performance, particularly in variables such as Average Price Charge, suggests inflationary pressures that might affect consumer spending and service delivery.
Inflation and labor force survey highlights
The Philippines witnessed inflation dropping to its lowest level since October 2020 at 2.8 percent in January 2024, a decrease from December 2023’s 3.9 percent. This downward trend in inflation, coupled with a decrease in unemployment to 3.1 percent in December 2023, presents a mixed bag of economic indicators. The labor force’s growth and the shifts in employment across various sectors reflect the economy’s evolving nature and the need for strategic interventions to sustain growth and stability.
Forward path: Navigating economic uncertainties
As the Philippines navigates through the complexities of 2024, the insights from the PMI data underscore the importance of adaptive strategies to bolster economic resilience. The interactions between sectoral performances, inflation rates, and labor market dynamics demand a nuanced understanding of the economic landscape to forge pathways toward sustainable growth. The economic journey ahead, while fraught with challenges, also presents opportunities for innovation, strategic policymaking, and collaborative efforts to strengthen the foundations of the Philippine economy.