Manufacturing momentum strengthens into Q3

From AB Capital's The Opening Bell: Three Moves

Event

Philippine manufacturing PMI rose to 54.9 in August from 51.8 in July, the strongest reading since December 2016. New orders accelerated, output expanded at its fastest pace in nearly a decade, exports returned to growth, and employment increased for the first time in five months.

View

We think the improvement provides an important buffer for 3Q26 gross domestic product (GDP) after the weak 2Q26 print. The pickup appears relatively broad, supported by electronics demand, new product launches and stronger domestic orders, while higher purchasing activity suggests manufacturers are preparing for firmer production through the coming months.

Catalyst

The quality of the rebound is encouraging because input cost inflation eased and selling price increases slowed despite stronger activity. If PMI remains above 53 through September, we believe manufacturing could provide a meaningful growth offset, although weak property, construction and household demand still limit the breadth of recovery.

Action

The read-through is positive for electronics exporters, industrial activity and selected logistics names, while stronger hiring should provide some support to consumption. In our view, however, higher oil, shipping and peso-related import costs remain key margin risks, particularly if the Middle East conflict again disrupts supply chains.

Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.