Manufacturing activity sees slower growth anew in June

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Metro Manila (CNN Philippines, July 1) — Philippine factory activity increased but at a softer pace in June as manufacturers dealt with even faster inflation and dampened foreign demand, S&P Global's recent survey revealed.

The S&P Global Philippines Manufacturing Purchasing Managers' Index (PMI) hit 53.8 in June, sliding from 54.1 in May but still above the 50.0 threshold between expansion and contraction.

This is the second straight month of a lower PMI value.

S&P Global noted that new orders did increase in June. However, cost burdens and charges incurred by firms rose again - with rates of input price and output charge inflation "among the fastest on record" according to the US information service provider.

"Domestic demand remained strong as the lifting of pandemic restrictions allowed customer activity to pick-up. In contrast, foreign client demand contracted for the fourth month running, and at a sharper pace," said S&P Global Market Intelligence economist Maryam Baluch.

Weak international demand, along with supply issues, brought down new work from abroad according to surveyed firms.

S&P Global likewise observed a milder increase in manufacturers' input purchase.

"Only a modest rise in the quantity of input purchases was registered in the latest survey period, as the respective seasonally adjusted index posted the closest to the 50.0 no-change mark in the current sequence of expansion that began in February 2022," it said.

Pre- and post-production inventories along with job creation climbed at a milder rate than May as well, said S&P Global.

Firms still passed bigger input prices to their customers given the uptick in average cost burdens in June, it added.

With the recent commodity price increases, manufacturers turned more hesitant in their output expectations for the year ahead according to S&P Global.

"The degree of confidence hit a 26-month low as firms highlighted concerns surrounding supply-side challenges, persistent inflation, energy price increases and peripheral global uncertainties that continue to spillover and restrain the Filipino manufacturing sector," said Baluch.

RELATED: BSP sees inflation accelerating between 5.7% to 6.5% in June 

Still, S&P Global said companies are still confident overall - anchoring their optimism on hopes of better economic conditions as the impacts of the global health crisis continue to unwind.