The manufacturing sector’s operating conditions improved at a faster rate in August amid strong gains in employment, according to a report released yesterday.
The S&P Global Philippines manufacturing purchasing managers’ index (PMI) rose marginally to 51.2 in August from 50.8 in July, which is above the 50 no-change mark that separates growth from contraction for the seventh month running.
The report said the rate of expansion improved from the six-month low seen in July as output stabilized and a softer contraction in new orders was registered.
Furthermore, employment figures remained strong, with workforce expansion now in its fourth month, it said.
The S&P Global report however said while this signaled a stronger improvement in the health of the sector, the uptick was weaker than the series average.
“August PMI data signaled an improvement in operating conditions across the Philippines manufacturing sector.Encouragingly, employment increased strongly and at the sharpest pace since mid-2017. However, growing downside risks to growth challenge the sector.
Already we have seen output failing to expand during the latest survey period, and factory orders falling for the second consecutive month,” Maryam Baluch, economist at S&P Global Market Intelligence, said.
“Furthermore, price pressures remained persistently high. Headwinds heighten concerns that inflationary pressures, supply chain disruptions, the weakening of the peso and a high interest rate environment, with further hikes expected, will squeeze demand as clients’ disposable income will take a hit,” Baluch added.
The report said sentiment across manufacturing firms in the Philippines remained strongly positive during August with around half of survey respondents hopeful of an expansion in output in the coming 12 months.
However, the degree of confidence posted second-lowest in seven months and was subdued in the context of the series history, it added.
“While the Filipino economy showed strong growth post-COVID, the following months will challenge momentum, with the PMI data already recording softer output expectations for the year ahead,” Baluch said. –Angela Celis
