Philippines: Manufacturing sector conditions deteriorate for the first time in two years in August
The S&P Global Manufacturing Purchasing Managers’ Index (PMI) came in at 49.7 in August, down from July’s 51.9. Consequently, the index dropped below the 50.0 no-change threshold, signaling a deterioration in manufacturing sector operating conditions from the previous month. August’s result marked the worst performance since August 2021.
August marked the first decline of the index in two years due to a drop in new business and weaker output growth. Waning domestic demand and poor weather conditions drove the deterioration; external demand growth also softened sharply. In turn, employment in the sector decreased at the strongest pace in 23 months. More positively, firms built on their stocks in August, anticipating stronger demand ahead.
On the price front, input cost pressures intensified in August; firms reported rising fuel and other raw material costs as the culprit. Meanwhile, optimism in the sector rose to a seven-month high.
Maryam Baluch, economist at S&P Global Market Intelligence, commented on the release:
“Weak underlying demand trends as pointed by the first drop in new orders in a year and the ongoing reductions in staffing levels shows visible cracks in the sector. Moreover, headwinds from the high interest rate environment and inflation, as well as China’s less than expected post Covid-19 growth, could potentially result to subdued growth in the coming months.”