Home » Customs & Trade, Press Releases » PH manufacturing logs modest hike in July on strong domestic demand

The Philippines’ manufacturing activity index increased to 52.1 in July 2019 from 51.3 in June, signaling a moderate improvement in the health of the sector that is the strongest seen since the start of the year, according to the latest Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI).

A PMI score of above 50 means there is an overall increase in manufacturing activity.

The July PMI, however, was weaker than the average recorded since January 2016.

“New order growth was up notably in July, easing some worries in recent months that the manufacturing environment was facing a slowdown. Output, meanwhile, increased at a solid rate, albeit one that was weaker-than-average for the Filipino goods-producing sector,” David Owen, economist at IHS Markit, which compiles the PMI survey, said in a statement.

“Despite the sudden uplift in demand, price pressures appeared unaffected. Input prices rose at only a modest pace, with an improvement in the exchange rate with the US dollar helping to ease the impact of higher raw material prices. This fed through into the softest increase in selling prices at manufacturers since June 2017. Overall, this should help to maintain strong sales growth if demand conditions remain elevated,” Owen added.

Contributing to the growth upturn was a notable acceleration in the rate at which new orders increased in July. Companies noted higher demand for manufactured goods compared to the previous month, with some highlighting the impact of new projects and higher spending power among customers.

The increase in demand was largely domestic, as latest data indicated a second successive monthly fall in new export orders. A number of firms reported a lack of orders from foreign clients, although the overall rate of decline was slightly softer than in June.

A key impact of increased demand was that firms raised input spending at the quickest rate in eight months during July.

Nevertheless, IHS Markit said suppliers were able to handle input orders, with lead times relatively unchanged from the previous month. It noted that there were some mentions of continued congestion around the port of Manila, but these were fewer than seen earlier in the year.

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