Philippine Manufacturing Sector Sees Fastest Growth in Five Months in July

MANILA, Philippines — The Philippine manufacturing sector expanded at its fastest pace in five months in July amid stronger demand. S&P Global said in a statement yesterday that the Philippines’ manufacturing purchasing managers’ index (PMI) rose to a five-month high of 51.8 in July from the previous month’s 50.9. This marks the third consecutive month that the PMI registered growth. A PMI reading above 50 indicates an overall increase compared to the previous month, while below 50 denotes a decline. Used to track the health of the manufacturing sector, the PMI is based on a survey of 400 manufacturers and considers the following: new orders, output, employment, suppliers’ delivery times and stocks of purchases. “Manufacturers in the Philippines reported stronger demand conditions in July following the more subdued conditions seen in the second quarter,” S&P Global Market Intelligence economist Maryam Baluch said. As a result, both new orders and output posted the fastest growth since the war broke out in the Middle East earlier this year. Amid higher production requirements, manufacturers also increased their purchasing activity. “However, as manufacturers continued to face stretched supply chains and a renewed pick-up in cost pressures, inventories came under strain,” Baluch said. While firms saw reduced work backlogs, staffing levels declined moderately in July. Manufacturers attributed the decline to voluntary resignations and the inability to fill vacancies. “Despite the improvement in sector conditions, confidence remained historically muted,” Baluch said. She added that the decline in payroll numbers suggests that “firms may need clearer signs of a sustained improvement in economic conditions before resuming hiring.” Bank of the Philippine Islands lead economist Emilio Neri Jr. said that a sustained recovery in manufacturing would support a substantial improvement in economic performance. “We’re hoping that the first half of this year is already the bottom for growth and that together with the recovery in manufacturing, hopefully some stability in the geoeconomics side, we can see a more meaningful recovery in the second semester, allowing us to grow hopefully more than three percent,” he said. The economy grew by 2.8 percent in the first quarter, the weakest in five years. The Philippine Statistics Authority will release second quarter economic performance data on Aug. 7.