Philippine manufacturing conditions post 'moderate' improvement in July

MANILA, Philippines — Factory activity growth in the Philippines picked up in July to post a "moderate" improvement in manufacturing conditions, as sales growth reached a six-month high and enabled “a solid increase” in production, according to the latest monthly survey by IHS Markit.

The Philippines’ Purchasing Managers’ Index, or PMI, jumped to 52.1 in July from 51.3 in June.

The latest reading was the “strongest” since January, but it was also weaker than the average recorded throughout the series history or since the start of 2016.

A PMI reading above 50 indicates economic expansion, while a reading below 50 points toward contraction.

“New order growth was up notably in July, easing some worries in recent months that the manufacturing environment was facing a slowdown,” said David Owen, economist at IHS Markit.

“Output meanwhile increased at a solid rate, albeit one that was weaker-than-average for the Filipino goods-producing sector,” Owen added.

According to IHS Markit, the spike in demand last month was largely domestic, with companies surveyed reporting a lack of orders from foreign clients.

Despite the higher demand, selling prices were “subdued” in July as firms raised their charges at the softest rate in over two years.

“Input prices rose at only a modest pace, with an improvement in the exchange rate with the US dollar helping to ease the impact of higher raw material prices,” Owen said.

“This fed through into the softest increase in selling prices at manufacturers since June 2017. Overall, this should help to maintain strong sales growth if demand conditions remain elevated,” he added.