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Philippines: Local factory output in June hits weakest in 10 months
MANILA, Philippines — Philippine factories saw output growth in June slide to its weakest in 10 months, but an analyst expects demand for locally-made exports to pick up in the coming months.,
Results of a survey of around 400 companies showed the Philippines’ Purchasing Managers’ Index (PMI) — a measure of factory output — retreated to 50.9 in June, from 52.2 in May, S&P Global said in a report on Monday.
The latest reading stayed above the 50-threshold separating growth from contraction. Maryam Baluch, economist at S&P Global, said the latest figures showed shades of weaknesses seen throughout the pandemic.
“Growth across the Filipino manufacturing factor slowed as the June PMI index reading signalled the weakest improvement in the health of the sector since July 2020,” Baluch said.
The latest outturn also spotlighted softer growth in new orders, amid workforce reductions across local factories.
S&P Global noted that the uptrend in manufacturing output posted its weakest since going on a run starting September 2022.
New orders, which bolsters the case for expanding factory output, rose albeit at a softer pace in June. An improvement in demand across local and foreign markets, alongside new clients, drove production up during the month.
The dip in output was blamed for keeping the workforce in factories lean, as S&P Global noted that some firms were actively cutting back on labor.
Domini Velasquez, chief economist at China Banking Corp., attributed the dip in factory output to a moderation in economic activity across the Philippines.
But she was bullish on the prospects of the manufacturing sector could swinging to the upside.
“Although external headwinds will likely cause softer export demand, we think that this is likely to improve,” she said in a Viber message.
Velasquez explained that bottlenecks easing across the global supply chain will benefit the local manufacturing sector.
Even decelerating inflation and softer producer prices will reap benefits for the sector as well.
“Moving forward, we expect the manufacturing sector to continue to expand modestly until we see improvement in Chinese and advanced economies’ demand,” she added. — Ramon Royandoyan
Source: https://www.philstar.com/business/2023/07/03/2278334/local-factory-output-june-hits-weakest-10-months