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The Philippines’ manufacturing sector remained solid in June 2022 despite loss of growth momentum and optimism at its lowest since April 2020
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The S&P Global Philippines Purchasing Managers’ Index eased to 53.8 in June from 54.1 in May
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Operating conditions had improved for fifth successive month with the headline PMI signalling solid overall growth in the manufacturing sector
Philippine manufacturing continued to improve in June 2022, indicating solid growth for the sector despite easing momentum and optimism being at its lowest since April 2020.
The S&P Global Philippines Purchasing Managers’ Index (PMI) slipped marginally to 53.8 in June from 54.1 in May, according to the latest survey of New York-based financial and information analytics firm S&P Global.
Despite the sector losing growth momentum for the second month running, operating conditions for PH manufacturing in June have improved for the fifth successive month, with the headline PMI figure signaling solid overall growth in manufacturing, S&P Global noted.
READ: PH manufacturing down slightly in May but still in expansion mode
“Domestic demand remained strong as the lifting of pandemic restrictions allowed customer activity to pick up. In contrast, foreign client demand contracted for the fourth month running, and at a sharper pace,” S&P Global economist Maryam Baluch said in a statement.
Production levels rose at their second-fastest pace since November 2018. Anecdotal evidence showed that greater customer demand prompted the larger output in June.
Driving the rise in production, factory orders received at goods producers also increased at an accelerated pace in June.
Export volumes contracted again, as has been seen each month since March. Weak international client demand and supply issues reportedly led to diminished volumes of new work from abroad.
With activity picking up at manufacturing firms, employment levels rose for the second successive month in June.
On the other hand, PH manufacturing June data signalled a softer increase in manufacturers’ input procurement. Only a modest rise in the quantity of input purchases was registered in the latest survey period, as the respective seasonally adjusted PMI was closest to the 50.0 no-change mark in the current sequence of expansion that began in February 2022.
Similarly, both pre- and post-production inventories increased at a softer pace than that seen in May, but remained modest overall as firms noted rising business requirements.
On the price front, average cost burdens rose further as companies continued to register higher energy and raw material prices. While the rate of inflation eased for the third month running, it remained sharp overall.
With average cost burdens rising, companies continued to pass greater input prices on to their customers. Output prices also rose markedly, albeit at a softer pace than in May.
However, concerns about the outlook for output in the coming year were apparent. Rising fuel prices and inflationary pressures weighed on business expectations.
Manufacturing firms in the Philippines registered the least optimism since April 2020. Overall, companies remained optimistic of output expansion in the next 12 months, pinning their hopes for better economic conditions on the waning impacts of COVID-19.
