Factory activity improves in June

MANILA, Philippines — The country’s manufacturing sector remained in expansion mode and rose at a slightly faster pace in June from the previous month as demand conditions improved.

S&P Global said in a statement yesterday that the Philippines’ manufacturing purchasing managers’ index (PMI) rose to 50.7 in June from the previous month’s 50.1 reading.

The PMl is derived from a survey of around 400 manufacturers and considers the following: new orders, output, employment, suppliers’ delivery times and stocks of purchases.

An above 50 PMI reading indicates growth from the previous month, while below 50 denotes a contraction.

S&P Global said new orders rose in June due to successful customer acquisitions, improving demand, as well as effective promotional efforts.

The uptick in new orders pushed production levels to expansion territory and prompted manufacturing firms to increase their buying activity.

Employment in the manufacturing sector also saw a revival in June as it went up for the first time in four months.

“While new orders continue to rise, they do so at a historically muted pace, weighed down by a stalled exports picture,” S&P Global Market Intelligence economist Maryam Baluch said.

Baluch said supply side challenges, including delayed delivery times for inputs and material shortages, also affected production capacity.

According to S&P, the outlook on Philippine manufacturing output strengthened compared to May due to an increase in customer numbers, the realization of ongoing projects, stable local market demand, as well as effective promotional campaigns.

Despite the improvement, S&P Global said the degree of confidence is below historical levels.

“The next couple of months will be important to gauge if the sector is able to return to growth rates seen in much of last year,” Baluch said.

Reduced inflationary pressures and sustained demand are expected to help Filipino manufacturers achieve this.