Philippines: Manufacturing PMI signals another month of robust expansion in June
July 3, 2017
The Philippines’ manufacturing industry continued to grow in June, albeit at a slightly slower pace. The Manufacturing Purchasing Managers’ Index decreased from 54.3 in May to 53.9 in June, the second highest reading so far this year, according to a release provided by Nikkei and IHS Markit. The index thus remains comfortably above the 50-point threshold which separates expansion from contraction in the manufacturing sector.
June’s deceleration came mainly on the back of marginally slower growth in output and new orders. Overall, new orders expanded solidly in June, in part thanks to promotional activity and outlet expansions. On the external front, export sales rose at a faster pace than in May, showing that domestic demand is being reinforced by the external sector. Strong growth in new orders led to another month of staff hiring, while backlogs of work, thanks to the additional staff and abundant production capacity, declined for the sixteenth month straight. Regarding prices, the rise in input costs softened but remained robust overall, due to a weaker peso and higher raw material prices, and translated into a smaller hike in output prices than in the prior month.
Bernard Aw, economist at IHS Markit, commented: “The Philippines manufacturing sector rounded off the second quarter on a strong note, with a solid performance in June. That put the domestic economy on track for another quarter of robust GDP growth. […] While the domestic market remained the key pillar of manufacturing growth, there were signs that external demand is contributing more to the expansion. […] Overall, the outlook for the manufacturing sector remains optimistic into the third quarter, underpinned by buoyant business confidence and strong sales volumes. That will augur well for the Philippines economy and its labour market.”