Manufacturing performance in Emerging Asia remains weak in May

Czeriza Valencia (The Philippine Star) - June 3, 2019 - 12:00am

MANILA, Philippines — Manufacturing performance in Emerging Asia is expected to have remained weak in May following the weak performance in developed countries,” according to London-based Capital Economics.

“Purchasing Managers’ Index (PMI) readings for this month are likely to be weak,” the macroeconomy research firm said.

“This would fit with the preliminary manufacturing PMIs for the US and the euro-zone and the Flash PMI in Japan. The weighted-average of the three readings dropped sharply in May to the lowest since 2012,” it said.

Philippine manufacturing conditions weakened in April as output sinks to a 19-month low, according to the latest Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI).

The headline manufacturing PMI for the Philippines weakened from 51.5 in March to 50.9 in April, the lowest reading in nine months.

This is already approaching contraction level as a reading of below 50 indicates deteriorating business conditions.

The headline PMI provides a quick overview of the health of the manufacturing sector based on output, new orders, job creation, inventories and delivery times.

Output growth during the period was subdued with new orders rising at the slowest pace in nine months as demand from overseas saw a moderate decline.

The Philippine manufacturing sector was the fourth best performer in ASEAN during the month.

Even at the regional level, marginal improvements were seen in manufacturing activity.

The headline Nikkei ASEAN Manufacturing PMI rose to 50.4 in April from 50.3 in March as slight uplift were seen in output and new orders.

Some manufacturers across the region also increased the number of workers to cope with the increase in demand. Input buying, however, remained subdued.

“Further ahead, things are unlikely to improve much. Our forecasts for a slowdown in the global economy imply weakening external demand. The escalation of the US-China trade war also presents another headwind to Asia’s export-oriented manufacturers,” said Capital Economics in the brief.

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