DOMESTIC manufacturing conditions remained steady in August amid improving demand trends, S&P Global Market Intelligence reported on Monday.

The Philippine Purchasing Managers' Index for the sector remained at 51.2, unchanged from July's print. Results above 50 point to growth, while those below indicate a contraction.

"Underlying data signaled improved demand trends, with Filipino goods producers recording the strongest uptick in new orders in three months," S&P Global said.

However, S&P Global reported that foreign demand weakened for the month, with new export sales dropping for the first time this year, making domestic demand the main driver.

Despite a drop in foreign demand, it was noted that overall growth in new orders led to a stronger increase in August output.

Rising business needs led firms to increase purchasing, but the rate of growth slowed to a five-month low and remained modest. This resulted in a smaller rise in pre-production inventories and a decline in post-production inventories in August.

Also, firms became cautious about hiring new staff, resulting in a decline in employment. Despite this, goods producers managed to complete their workloads efficiently, suggesting they have enough capacity.

Moreover, with inflationary pressures easing further, selling prices rose moderately, showing that firms are partially absorbing costs to boost sales and stay competitive.

However, lead times for supplier inputs also lengthened, marking the fourth consecutive month of delays, though the delays were less severe than in previous months.

For the coming months, firms expect output to continue growing, with optimism remaining strong above the neutral 50.0 mark.

However, confidence dipped slightly, indicating that more modest production gains are expected compared to July.