PH manufacturing output growth slowed to three-month low in June —S&P Global

The Philippine manufacturing sector performed at a three-month low in June amid slower growth in new orders and weaker demand trends, results of the latest survey conducted by S&P Global released on Monday showed.

The headline S&P Global Philippines Manufacturing PMI stood at 51.3 in June, down from the 51.9 in May. A reading above the 50.0 threshold indicates an expansion, while levels below indicate a contraction.

“While strong improvements in demand trends earlier in the second quarter allowed manufacturing firms to raise their production volumes at a solid and sustained rate in June, the recent cooling in demand conditions could mean weaker upticks in output as we move into the second half of the year,” S&P Global Market economist Maryam Baluch said in a commentary.

“Moreover, while growth in output fed through to higher purchasing activity, it failed to translate into job creation. The second consecutive month of job shedding reflected the lack of pressure on operating capacity within the sector, as backlogs were depleted sharply,” she added.

New order growth was the second-weakest in the current 10-month sequence of growth, along with the easing of foreign demand. New export orders also grew at three-month low during the period.

Backlogs were depleted at a quicker rate and the most pronounced in three months, even as employment figures have deteriorated for a second straight month. This comes as firms trimmed their workforce numbers, and there were some reports of non-replacement of voluntary leavers.

Firms picked up their purchasing activity during the period to hit the fastest growth since July 2023, with rising production volumes and hopes of increased activity.

Pre-production inventories were accumulated for the fourth straight month, with growth slightly decelerating due to traffic and delays at customs. Post-production stocks were raised at an accelerated rate for the month.

Cost burdens for the month rose with input price inflation hitting the strongest since February amid reports of raw material shortages, causing manufacturers to raise their charges.

“Futerte expectations also retreated, further alluding to softening sentiment in the outlook. However, inflationary pressures remain in check, despite a renewed rise in operating costs,” Baluch said.

“Relatively soft and subdued upticks in costs and charges could help the sector generate demand in the coming months,” she added.

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 June on August 7, 2024. —KBK, GMA Integrated News