Philippines: PMI rebounds for the first time in six months in May
June 3, 2019
The manufacturing Purchasing Managers’ Index (PMI), produced by Nikkei and IHS Markit, inched up to 51.2 in May from 50.9 in April. The index thus remained above the critical 50-point threshold that separates expansion from contraction in the manufacturing sector.
Operating conditions improved at a stronger rate in May as faster new order growth was buoyed by stronger export orders and solid domestic demand. In turn, rising new business prompted manufacturers to boost production, leading to a rise in inventories, and increased purchasing activity. On a less positive note, employment fell at the sharpest rate in 15 months in May, with companies again reporting multiple resignations as a contributing factor. Nevertheless, firms were still able to clear logs of outstanding business. Supply-side pressures continued to ease in May, with less delays from port congestion in Manila shortening supplier delivery times.
On the price front, input cost inflation eased to the weakest rate in over three years, whereas output price inflation picked up in the month. Finally, manufacturers were more optimistic regarding the production outlook in May, on a more positive assessment of demand conditions.
David Owen, economist at IHS Markit, commented: “Filipino goods producers reported an improved picture in May, as output growth strengthened amid a sharper increase in new orders. Firms were helped by a rise in foreign demand for only the second time since last September as the global trade war intensification led to weaker export conditions. This should ease some nerves in the wake of further tariffs announced by the US and China.”
Author: Lindsey Ice, Economist