Philippines PMI July 2017


Philippines: Manufacturing PMI signals some slack at the start of Q3

August 1, 2017

The Philippines’ manufacturing industry continued to grow in July, albeit at a slower pace. The Manufacturing Purchasing Managers’ Index decreased from 53.9 in June to 52.8 in July, the weakest reading in six months, according to a release provided by Nikkei and IHS Markit. The index nevertheless remains above the 50-point threshold which separates expansion from contraction in the manufacturing sector.

July’s deceleration came mainly on the back of slower growth in output and new orders. Overall, new orders expanded solidly in July, in part thanks to marketing activity, new models and higher demand for electronic products. Nevertheless, the rate of expansion was significantly slower than that recorded in June and below the historical average, partly as a result of the martial law imposed on Mindanao. On the external front, export sales rose at a slower pace than in June. More sluggish growth in new orders led to a deceleration in output growth and weaker staff hiring. Moreover, backlogs of work fell, due to greater staff numbers and overtime work. Regarding prices, input cost growth accelerated, reverting the recent moderation, due to a weaker peso and higher imported goods prices, and translated into a hike in output prices.

Bernard Aw, economist at IHS Markit, commented: “The Philippines manufacturing economy started the third quarter on a softer note but the slowdown is likely to be short-lived. […] Business optimism remained elevated, suggesting that companies expect the pullback in business activity to be transient.”

FocusEconomics Consensus Forecast panelists see manufacturing rising 5.9% in 2017, which is down 0.5 percentage points from the previous month’s estimate. For 2018, the panel expects manufacturing to increase 5.9%.

Author: Massimo Bassetti, Economist

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Philippines PMI Chart

Philippines PMI July 2017

Note: Nikkei Indonesia Manufacturing Purchasing Managers’ Index. Readings above 50 indicate an expansion in the manufacturing sector while readings below 50 indicate a contraction.
Source: Nikkei and IHS Markit.

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