Factory activity growth eases to 3-month low in June

MANILA, Philippines — The country’s manufacturing sector expanded at its weakest pace in three months due to a slowdown in demand.

In a statement, S&P Global said the Philippines’ manufacturing purchasing managers’ index (PMI) fell to a three-month low of 51.3 in June from 51.9 in May.

Despite posting slower growth in June, the latest PMI reading marked the 10th consecutive monthly improvement in the Philippine manufacturing sector.

Generated from a survey of around 400 manufacturers, the PMI is a measure of manufacturing performance, taking into account new orders, output, employment, suppliers’ delivery times and stocks of purchases.

A PMI reading above 50 indicates an overall increase compared to the previous month, while below 50 denotes a contraction.

S&P Global said the country’s manufacturing sector sustained the growth in production levels, with output posting its strongest expansion in six months.

However, there was a slowdown in the growth in new orders, indicating softening demand.

“While strong improvements in demand trends earlier in the second quarter allowed manufacturing firms to raise their production volumes at a solid and sustained rate in June, the recent cooling in demand conditions could mean weaker upticks in output as we move into the second half of the year,” S&P Global Market Intelligence economist Maryam Baluch said.

Even as higher production volumes led to increased purchasing activity, she said it failed to translate into news jobs in the manufacturing sector.

“The second consecutive month of job shedding reflected the lack of pressure on operating capacity within the sector, as backlogs were depleted sharply,” she said.

In terms of prices, manufacturing firms raised charges at a softer pace in June.

“Relatively soft and subdued upticks in costs and charges could help the sector generate demand in the coming months,” Baluch said.

For the next 12 months, manufacturers in the country have a positive outlook for production as they expect demand to improve and support output growth.

S&P said the level of optimism, however, dimmed in June from the previous month’s high and was weaker than the series average.