PH manufacturing output growth slowed in May -survey

The Philippine manufacturing sector grew at a slower pace in May as firms struggled to maintain their workforce while charges continued to rise,  results of the latest survey conducted by S&P Global released on  Monday showed.

The headline S&P Global Philippines  Manufacturing PMI stood at 51.9 in May, lower than the five-month high of 52.2 in April. A reading above the 50.0 threshold indicates an expansion, while levels below indicate a contraction.

“The  Filipino manufacturing sector continued to report further gains mid-way through the second quarter, with growth sustained in new orders and output. Further expansions in business requirements supported a rise in purchasing activity and inventories,” S&P Global Market Intelligence economist Maryam Baluch said.

Total sales growth eased fractionally from April but extended the expansion for the ninth straight month amid underlying demand trends, as external demand strengthened with new export orders up for the fourth straight month.

“However, firms struggled to maintain their workforce numbers with job shedding noted for the first time in five months. Though with backlogs continuing to fall, goods producers still appear equipped to deal with tasks on hand,” Baluch said.

“Latest data also signaled a fall in input prices, with some companies attributing this to a switch to new suppliers. However, charges continued to rise, indicating that firms wished to maintain and build their margins,” she added.

Job shedding was the fastest in nine months, which firms attributed to voluntary leavers, but backlogs continued to decline indicating that firms were still equipped to handle the continued increase in demand.

Cost burdens dropped fractionally, marking the first drop since April 2020,  as companies noted switching to more competitively priced suppliers.  Charges, however, were raised at an accelerated pace.

“Subdued inflationary pressures and a further improvement in the demand picture indicate that economic growth will likely be sustained in the coming months. Reflecting positive sentiment, optimism picked up to a nine-month high,” Baluch said.

Expectations for the year ahead picked up for the first time in five months to hit the highest level in nine months as firms cited further improvements in demand conditions and expansion plans on business operations and products.

Survey responses were collected in the second half of the month, taking into account responses from purchasing managers in a panel of around 400  manufacturers. PMI is a weighted average of new orders, output,  employment, suppliers' delivery times, and stocks of purchases.

The Philippine Statistics Authority (PSA) will release the official manufacturing figures for May on July 9, 2024. — DVM, GMA Integrated News