In June: Philippines factory activity sustains expansion

MANILA, Philippines — The Philippine manufacturing sector remained in expansion mode in June, supported by improved demand and output, but firms’ confidence levels dropped to a five-month low.

In a statement yesterday, S&P Global said  the country’s manufacturing purchasing managers’ index (PMI) went up slightly to 50.9 in June from 50.8 in May.

PMI measures the health of the manufacturing sector. A reading above 50 indicates expansion compared to the previous month, while below 50 reflects a decline.

The figure, which is the weighted average of new orders, output, employment, suppliers’ delivery times and stocks of purchases, is generated from a survey of around 400 manufacturers.

“Manufacturing conditions in the Philippines continued to improve in June, building on the tentative recovery observed in May as the sector regained footing following disruptions linked to the war in the Middle East,” S&P Global Market Intelligence economist Maryam Baluch said.

Manufacturers’ output increased as new orders grew, reflecting improved demand.

Growth in new orders also encouraged manufacturers to increase their purchase of additional raw materials for the first time in four months.

In addition, manufacturers reported unchanged staffing levels in June, marking a stabilized employment picture.

“This marks a shift from job losses recorded in the opening months of the second quarter,” Baluch said.

She said backlogs due to higher orders also point to potential hiring in the future.

While inflationary pressures eased in June, she said sharp increases in the two preceding survey periods weighed on the outlook for the year ahead.

Overall, manufacturers are optimistic and expect improved demand as they plan to roll out new products and expand to new markets, but confidence levels fell to their lowest since January.

“Business confidence fell markedly in June, indicating that while the sector gained traction, firms are cautious regarding the outlook,” Baluch said.

For her part, Federation of Philippine Industries chair Elizabeth Lee said that businesses are currently weighing the cumulative toll of recent cost pressures.

“June’s PMI uptick shows Philippine manufacturing can still grow under pressure. However, sustaining that growth means supporting workers while preserving businesses’ ability to invest, employ and compete. We cannot treat one factor in isolation,” she said.