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Philippine manufacturing fell to a three-month low in June 2024
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The headline Philippines Manufacturing Purchasing Managers’ Index dropped to 51.3 in June from 51.9 in May
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While the latest reading signaled a softer rate of growth, it still marked a 10th consecutive monthly improvement in the health of the Filipino manufacturing sector
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New order growth saw a notable cooldown, indicating a weaker improvement in underlying demand trends in June
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The rate of growth in new export orders slowed from May’s recent high to a three-month low
The Philippine manufacturing sector fell to a three-month low in June.
The headline Philippines Manufacturing Purchasing Managers’ Index (PMI)–a composite single-figure indicator of manufacturing performance–dropped to 51.3 in June from 51.9 in May.
While the latest reading signaled a softer rate of growth, it nonetheless marked a 10th consecutive monthly improvement in the health of the Filipino manufacturing sector, according to the latest survey of S&P Global.
Propping up the manufacturing sector was the sustained rise in production levels with output rising solidly at the strongest pace in six months, S&P Global noted.
There was, however, a notable cooldown in new order growth, indicating a weaker improvement in underlying demand trends in June. Easing further from April, the latest upturn was the second-weakest in the current 10-month sequence of growth.
Additionally, foreign demand for Filipino manufactured goods also eased on the month. The rate of growth in new export orders slowed from May’s recent high to a three-month low.
With demand trends cooling, S&P Global said manufactures were able to keep on top of their workloads.
Backlogs were depleted at a quicker rate, which was the most pronounced in three months.
Increasing spare capacity forced firms to trim their workforce numbers in June. There were also some reports of the non-replacement of voluntary leavers. S&P Global said the employment picture has now deteriorated for a second straight month.
Nevertheless, rising production volumes and hopes of increased activity in the coming months, encouraged Filipino manufacturers to ramp up their purchasing activity. The rate of growth quickened on the month to the fastest since July 2023.
Goods producers across the Philippines maintained their stock-building approach. Pre-production inventories were accumulated for the fourth month running.
While the uptick was solid overall, there was a slight loss in growth momentum, partly reflecting the ongoing deterioration in vendor performance caused by traffic and delays at customs. Post-production stocks were also raised during June, and at an accelerated rate.
June data also signaled a renewed rise in cost burdens, following a slight decrease in May. The rate of input price inflation was the strongest since February amid reports of raw material shortages, but still remained softer than the series average. In turn, manufacturing companies raised their charges. The pace of inflation eased on the month and was modest overall, however.
Looking ahead, manufacturers maintained a positive outlook for production over the coming year, with hopes that improved demand conditions would support further output expansions. However, the level of optimism dimmed from May’s recent high and was weaker than the series average.
