The Philippine manufacturing sector rebounded in June, reversing a loss in growth momentum in May, the latest S&P Global Purchasing Managers’ Index (PMI) data showed Tuesday.
Production rebounded, effectively reversing a marginal contraction observed in the previous month, while new business rose at a stronger pace, S&P Global said.
The headline S&P Global Philippines Manufacturing PMI rose to 50.7 in June from 50.1 in May, indicating a stronger, though still modest, improvement in the health of the sector. A reading above 50 indicates expansion.
Improved demand and renewed growth in production requirements prompted firms to increase purchasing activity. The June data also marked a return to job creation, with payroll numbers rising for the first time in four months.
New orders in the Filipino manufacturing sector rose further in June. The pace of growth was slightly stronger than in the previous month, though it remained below the long-run survey average. S&P said anecdotal evidence attributed this uptick to successful customer acquisitions, improving underlying demand, and effective promotional efforts.
The upswing in new orders was robust enough to push production levels back into expansion territory, albeit marginally. The rate of output growth lagged the increase in new business.
“The overall performance of the Filipino manufacturing sector remained relatively subdued as the first half of the year concluded,” said Maryam Baluch, economist at S&P Global Market Intelligence.
“That said, the overall PMI figure masked some pockets of strength, such as the revival in employment, which was the first in four months. Output was also raised, thereby reversing the fall in May,” said Baluch.
Baluch noted that, “while new orders continue to rise, they do so at a historically muted pace, weighed down by a stalled exports picture. Additionally, supply-side challenges, such as delayed delivery times for inputs and material shortages, impacted production capacity.”
Baluch said the next couple of months would be important to gauge if the sector could return to growth rates seen in much of last year. Lower inflationary pressures and sustained demand would partly help Filipino manufacturers achieve this through scope for improved pricing power, Baluch said.
