The manufacturing sector’s operating conditions slowed down in July amid contractions in output and new orders, according to a report released yesterday.
The S&P Global Philippines manufacturing purchasing managers’ index (PMI) fell to 50.8 in July from 53.8 in June, signaling only a minor improvement in the health of the sector.
The July figure measured just slightly above the 50 no-change mark that separates growth from contraction.
The report said the main drivers behind the lower headline figure were fresh contractions seen across both production levels and inflows of new business.
According to survey respondents, client activity was weak in July, with higher charges impeding sales.
“Data from the latest PMI survey indicated a loss in growth momentum at goods producers in the Philippines. Renewed contractions in output and new orders, albeit only mild, were recorded in July. The headline figure slipped to 50.8 in July to signal the slowest expansion since January,” said Maryam Baluch, economist at S&P Global Market Intelligence.
“Despite only a marginal rise in input buying and demand for materials, average lead times lengthened to a greater extent as firms noted port congestion, shipment delays and logical challenges,” Baluch added.
Baluch said overall, muted growth across the Filipino manufacturing sector adds caution to the air as inflationary pressures continue to heat up.
“Despite the downside risks to growth arising from greater inflationary pressure, the outlook for the coming 12 months strengthened in July, with firms upbeat and remaining hopeful of a better global economic climate,” Baluch said.
In a separate statement, Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said the latest PMI data was largely brought about by higher prices amid the Russia-Ukraine war, resulting in higher input costs for manufacturers, as the well as higher global interest rates that dragged growth in the manufacturing sector.
He said it could also be slowed down by the risk of recession in the United States and some lockdowns continuing in China.
“Nevertheless, the local manufacturing PMI (is) still among the fastest since the pandemic started thereby still considered one of the bright spots for the economy that could bode well for the gross domestic product growth data and for the overall pace of the country’s economic recovery from the pandemic,” Ricafort said.
