“Input cost inflation remained steep, as a combination of domestic and external factors were responsible for the upward pressure.”
The manufacturing sector maintained its growth at the close of the first semester, the Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI) of IHS Markit reported Monday.
“As the first half of the year concluded, the Philippines manufacturing economy continued to recover from the implementation of the TRAIN (Tax Reform for Acceleration and Inclusion) tax reforms at the start of the year. The latest Nikkei survey showed improving demand conditions at the end of the second quarter,” IHS Markit principal economist Bernard Aw said.
Although manufacturing PMI slid to 52.9 in June from 53.7 in May, the sector’s output and orders increased last month, while employment levels were broadly steady.
Local demand and rising exports supported production last month, the report noted.
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This prompted companies to boost their purchasing activities to further increase their stocks.
But the IHS Markit survey mentioned that the higher production usage limited the inventory gain leading to lower inventories of finished products in June – the first time for the country to record falling inventories in the last four months.
“Firms attributed the depletion to higher demand from distributors and increased sales,” the report added.
Moreover, Aw said that inflation pressures remain strong in the country resulting to higher factory gate price.
“Input cost inflation remained steep, as a combination of domestic and external factors were responsible for the upward pressure,” the economist said.
“The depreciation of peso, increased taxes, supply shortages, higher global commodity prices, especially for fuel, all contributed to inflation,” he added.
Meanwhile, the Philippines’ manufacturing score last month was the third strongest among ASEAN countries. The country’s production PMI was behind Vietnam’s index of 55.7 and Singapore’s 53.6.
The country’s manufacturing performance was better than Indonesia’s 50.3, Thailand’s 50.2, and Myanmar’s 50.
Malaysia’s manufacturing sector, among the surveyed countries in the region, posted a deterioration with index posting 49.5 in June.
The index is a gauge of a country’s manufacturing sector’s health.
Readings above 50 signal growth, while below 50 mean deterioration.
