Manufacturing rebounds, but cost pressures

From AB Capital's The Opening Bell: Three Moves

Event

Philippine manufacturing PMI improved in April, returning to expansion as domestic demand supported new orders. However, exports weakened, conditions worsened, and employment declined at the fastest pace.

View

In our view, this is more stabilization than a broad-based recovery. Domestic demand helped activity move back above 50, but the backdrop remains mixed. Input cost inflation reached its highest level since 2022, forcing manufacturers to raise selling prices.

Catalyst

Key sensitivities include fuel price normalization and fiscal spending. If input costs remain elevated, growth could stay margin-constrained despite improving demand. A pickup in government spending may help offset weakness, while exports remain a drag.

Action

We think investors should stay selective in industrial and consumer names. Favor firms with pricing power and cost discipline. Remain cautious on export-heavy and cost-sensitive companies where higher costs and weaker external demand may pressure margins.

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.