Mild growth offers ‘cautious’ hope despite slow exports
The Philippine manufacturing sector recovered mildly in June from a recent decline, with output and employment bouncing back after a soft patch in May, the latest S&P Global report showed.
The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) rose to 50.7 in June from 50.1 in May, the report released on Tuesday said. A reading above 50 signals improvement in operating conditions, although the gain was described as mild.
Output, demand rebound
S&P said production expanded in June, reversing the slight contraction seen the previous month. New business also picked up pace, prompting firms to boost purchasing activity.
“This improved demand picture and renewed growth in production requirements prompted firms to increase their purchasing activity to a stronger degree,” the report said.
Jobs bounce back
June also marked the first increase in manufacturing jobs in four months, indicating some lift in business confidence despite broader concerns.
“The sector’s overall performance remained relatively subdued, but there were pockets of strength,” Maryam Baluch, economist at S&P
Global Market Intelligence, said. “The revival in employment and the rebound in output offset the decline seen in May.”
New orders continued to rise, though at a historically soft pace, with export demand remaining sluggish. Baluch said supply-side issues — including delayed deliveries and material shortages — continued to weigh on production capacity.
Cautious near-term outlook
Looking ahead, Baluch said the coming months will be critical in determining whether the sector can regain the stronger momentum seen in much of 2023.
“Lower inflationary pressures and steady demand may help manufacturers regain pricing power,” Baluch added. “However, historically muted business confidence suggests a cautious path ahead.”
Analyst perspective
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the June PMI, while slightly improved, remains among the lowest in nearly two years.
He attributed the hesitancy among exporters to global trade uncertainty, particularly stemming from US policy shifts under President Donald Trump, including reciprocal tariffs.
“These could dampen export demand, delay investment decisions, and slow overall economic growth,” Ricafort said.
Geopolitical risk lingers
He also flagged geopolitical risks, such as the Israel-Iran conflict, which, despite a tentative ceasefire, could still trigger volatility across global commodity markets.
“Any surge in oil prices could push up inflation and further strain manufacturing activity,” he added.
