Philippines: Manufacturing PMI edges down in June
The manufacturing Purchasing Managers’ Index (PMI) dropped from 53.7 in May to 52.9 in June, according to a release provided by Nikkei and IHS Markit. Despite the drop, the PMI remains above the critical 50-point threshold that separates expansion from contraction in the manufacturing sector.
June’s print reflected weaker expansions in output and new orders. Growth in output nevertheless remained robust thanks to solid client demand, particularly from overseas markets. Despite higher output requirements, manufacturers did not face capacity constraints, and backlogs of work declined, reflecting improving productivity in the manufacturing sector. Staffing levels remained broadly unchanged in June after expanding in April and May, as firms did not need to hire additional staff to keep up with extra work volume. Regarding price developments, input costs rose sharply; manufacturers responded by raising output prices to maintain existing profit margins.
Commenting on input prices in June, Bernard Aw, Principal Economist at IHS Markit, noted that:
“Input cost inflation remained steep, as a combination of domestic and external factors were responsible for the upward pressure. The depreciation of the peso, increased taxes, supply shortages, higher global commodity prices, especially for fuel, all contributed to inflation.”