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Philippines: Factory activity slows in June
MANILA, Philippines — Philippine manufacturing activity in June posted its weakest expansion in nearly a year, as growth in production and new orders eased, according to S&P Global Market Intelligence.
In a statement yesterday, S&P Global Market Intelligence said the Philippines Manufacturing Purchasing Managers’ Index was at 50.9 in June, down from 52.2 in May.
While the latest reading is above the 50-mark that separates growth from contraction, it was the slowest expansion since July of last year.
Generated from a survey of around 400 manufacturers, the PMI takes into account new orders, output, employment, suppliers’ delivery times, and stocks of purchases.
“The muted headline figure reflected softer rates of expansion across both output and new orders, while manufacturing employment registered a fresh reduction,” S&P Global Market Intelligence economist Maryam Baluch said.
S&P Global Market Intelligence said output levels posted their weakest upturn since the expansion started in September last year.
New orders received by manufacturers in the Philippines also rose at a softer pace in June with demand coming from new clients, while the reduction in manufacturing employment was due to the non-replacement of voluntary leavers and firms actively trimming their workforce count.
“Meanwhile, rates of input price and output charge inflation slowed and were the softest recorded in over two-and-a-half years. With inflationary pressures fading and global economic uncertainties still a looming threat to growth, the central bank maintained their policy rate at 6.25 percent for the second successive policy meeting in June,” Baluch said.
Headline inflation in the Philippines eased further to 6.1 percent in May from 6.6 percent in April due to slower increases in transport and food prices.
Average inflation for the January to May period was at 7.5 percent, still above the Bangko Sentral ng Pilipinas’ two to four percent target range.
“Going forward, the sector remains optimistic about growth in the coming 12 months. However, global headwinds could dampen the outlook for manufacturers in the Philippines,” Baluch said.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the economic reopening narrative in China, which is the world’s second largest economy and among the biggest trading partners of the Philippines, is seen as a positive factor for local manufacturing activity.
“Further easing of the year-on-year inflation and in global or local interest rates later this year and into next year would also support some pick up in manufacturing activities for the coming months, on top of the further reopening of the Philippine economy towards greater normalcy with no more large scale lockdowns since 2022 and no more COVID restrictions as a policy priority, going forward,” he said.
Source: https://www.philstar.com/business/2023/07/04/2278395/factory-activity-slows-june