Philippines: Manufacturing PMI improves in August
The S&P Global Manufacturing Purchasing Managers’ Index (PMI) came in at 51.2 in August, up from July’s 50.8. As such, the index moved further above the 50.0 no-change threshold, signaling a faster improvement in business conditions in the private sector compared to the previous month.
The reading improved due to better operating conditions and sizeable gains in staffing levels. Output in August stabilized following July’s contraction, while the rate of job creation reached an over five-year high on expectations of output growth in the months to follow. Less positively, deteriorating external demand weighed on new export order inflows. In turn, purchasing activity in August was subdued. On the supply side, shipment delays and port congestion contributed to slower deliveries and longer lead times. Price pressures further weighed on the reading, as firms reported some of the highest input cost spikes on record. Lastly, confidence across manufacturing firms softened to the second-lowest level in seven months, despite remaining upbeat.
Turning to 2023, Maryam Baluch, economist at S&P Global, commented:
“Headwinds heighten concerns that inflationary pressures, supply chain disruptions, the weakening of the peso and a high interest rate environment, with further hikes expected, will squeeze demand as clients’ disposable income will take a hit. While the Filipino economy showed strong growth post-COVID, the following months will challenge momentum, with the PMI data already recording softer output expectations for the year ahead.”