PH manufacturing slows slightly in May

June 4, 2024

  • The Philippine manufacturing sector slightly slowed month-on-month in May
  • The headline Philippines Purchasing Managers’ Index was at 51.9 in May 2024 from 52.2 in April
  • Still, this indicates a modest improvement in operating conditions, with growth sustained in new orders and output
  • The headline PMI in May posted above the neutral 50.0 mark that separates contraction from expansion for the ninth successive month

The Philippine manufacturing sector slowed slightly in May, with the headline Philippines Purchasing Managers’ Index (PMI) at 51.9 from 52.2 in April.

Still this indicates a modest improvement in operating conditions, with growth sustained in new orders and output, according to latest data from S&P Global.

The headline PMI in May posted above the neutral 50.0 mark that separates contraction from expansion for the ninth successive month.

Growth in total sales was sustained in May, though the rate of increase eased fractionally from April, S&P Global noted.

Nonetheless, a further improvement in underlying demand trends and an expanding customer base helped stretch the current run of increase to nine consecutive months.

Demand from external markets strengthened in May, with new export orders rising for the fourth straight month and at a pace that was the most pronounced since December 2016.

Growth in new sales from abroad was widely attributed to improved demand trends in key export markets and new client wins.

Growth in sales encouraged firms to raise their production volumes, with an increase now noted in each of the last two survey periods. Moreover, output expanded at a quicker rate, and one that was the fastest in the year-to-date.

In line with sustained growth in production requirements May data signaled a sixth successive monthly rise in input buying.

Though the pace of increase softened, manufacturers in the Philippines expanded their purchasing activity solidly.

Many companies were also looking to build their inventories in order to meet continued growth in output.

Moreover, pre-production inventories were accumulated at a pace strongest in 13 months. Stocks of finished goods were also raised in May, though the rate of growth was the weakest in the current three-month sequence of expansion.

Despite growth in production requirements, companies struggled to raise their staffing levels, with job shedding noted for the first time since December 2023. The rate of decrease was the fastest in nine months, with firms largely attributing this to voluntary leavers.

Backlogs, though, continued to fall, indicating that many companies were equipped to handle the sustained rise in demand.

On the price front, cost burdens fell, albeit fractionally, for the first time since April 2020. Some companies noted switching to more competitively priced suppliers underscored the latest drop in costs.

However, charges were raised at an accelerated pace, indicating that companies are looking to build their profit margins.

Looking ahead, expectations for the 12-month outlook for output picked up for the first time in five months, with optimism hitting a nine-month high.

Source: https://www.portcalls.com/ph-manufacturing-slows-slightly-in-may/