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The Philippine manufacturing index fell slightly in July even as expansion was noted for both new orders and output
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The headline PMI posted at 51.2 in July, broadly in line with the 51.3 reading for June
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This marks an 11th successive month of improvement in operating conditions, albeit being only modest and the weakest since March
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Firms, however, recorded modest and cooling demand from overseas markets
The Philippine manufacturing index fell slightly in July even as expansion was noted for both new orders and output, according to the latest survey of S&P Global.
The headline Philippines Manufacturing Purchasing Managers’ Index (PMI) – a composite single-figure indicator of manufacturing performance – posted at 51.2 in July, broadly in line with the 51.3 reading for June.
This marked an 11th successive month of improvement in operating conditions, albeit being only modest and the weakest since March, said S&P Global.
“The second half of the year started modestly, with the Filipino manufacturing sector signalling further upticks in output and new orders,” S&P Global Market Intelligence economist Maryam Baluch said.
Production continued to rise across the Filipino manufacturing sector in July.
S&P Global said the latest data, however, signaled a cooldown in the rate of growth with production activity rising at the weakest pace in the current four-month sequence of expansion. Weighing on the upturn was the impact of longer supplier delivery times.
The incidence of delay was the most pronounced since February as port congestion hampered the timely delivery of inputs.
Nonetheless, demand trends continued to improve across the manufacturing sector. New orders rose at a rate faster than June’s five-month low.
Firms, however, recorded modest and cooling demand from overseas markets. A sustained rise in production requirements supported firms’ decisions to raise their purchasing activity further in July.
Though the rate of growth softened since the preceding survey period, S&P Global noted that it was solid overall. Firms remained keen to expand their holdings of finished goods and purchased items. Both pre-and-post-production inventories were accumulated at rates stronger than their respective long-run averages.
Despite backlogs falling for the 13th successive month in July, Filipino goods producers were spurred by the stronger uptick in new orders and raised their staffing levels. July data marked the first month of growth in employment since April, albeit only modest overall.
Turning to prices, July survey data also recorded a relatively muted inflationary environment. Cost burdens rose only modestly, despite the rate of input price inflation ticking up to a five-month high.
Meanwhile, the pace of increase in charges edged down to a three-month low and was only marginal overall.
Manufacturing companies based in the Philippines expect production to increase in the coming 12 months. The Future Output Index, which printed comfortably above the neutral 50.0 mark in July, indicated optimism regarding the outlook across the sector. There was a slight fall in the degree of confidence, however, as some firms remained cautious of the demand environment.
