The headline S&P Global Philippines Manufacturing PMI reading for June 2023 registered 50.9, still above the no-change 50.0 mark for 17 successive months now. However, this is down from 52.2 in May, signaling the weakest improvement in the health of the sector since July 2022.
The PMI or Purchasing Managers’ Index is an index of the prevailing direction of economic trends in the manufacturing and service sectors. It consists of a diffusion index that summarizes whether market conditions, as viewed by purchasing managers, are expanding, staying the same, or contracting.
S&P Global in a new report said overall manufacturing growth in June was supported by continued expansion in production and factory orders. However, the rates of increase for both orders eased from May amid reports of weaker underlying demand trends.
The report observed that manufacturing output growth in June was only fractional and marked the weakest pace in upturn since the current uninterrupted run of expansion began in September 2022.
In addition, new orders received by goods producers across the Philippines also rose at a softer pace in June, the expansion driven by additional demand and new clients.
Foreign demand
Similarly, foreign demand for Filipino manufacturers goods also expanded last month. The continued expansion in order book volumes encouraged manufacturing firms to raise their buying activity for the 10th successive month in June.
Moreover, the rate at which input purchasing grew was the quickest seen in four months.
However, manufacturers registered a fresh fall in employment in reaction to a slower rise in output following a period of job creation in May.
“According to surveyed businesses, the renewed reduction in manufacturing employment was in part due to the non-replacement of voluntary leavers as well as some firms actively reducing their payroll numbers,” the report said.
Meantime, June data indicated a renewed lengthening of delivery times for inputs, although the deterioration in supplier performance was fractional overall. The slowdown comes after vendor performance improved last May, the first time it had done so since July 2019.
Price pressures dwindled in the latest survey period, as the rate of input price inflation slowed notably to the weakest recorded since October 2020. In turn, firms raised their average selling prices at the softest pace in just over two-and-a-half years.
Finally, manufacturing companies across the Philippines remained upbeat that production would rise over the coming months on the back of greater new sales. But despite rising to a five-month high, the level of positive sentiment was weaker than the series trend, noted the report.
“Going forward, the sector remains optimistic of growth in the coming 12 months. However, global headwinds could dampen the outlook for manufacturers in the Philippines,” it added. (PHILEXPORT)