As inflationary pressures mount further, the growth of the local manufacturing sector in June moved at its slowest expansion in almost a year, the latest survey from S&P Global showed.
The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) fell to 50.8 last month from 53.8 in June. The headline figure was just slightly above 50.0 no- change threshold that separates growth from contraction.
“Average cost burdens rose sharply during July, as the pace of increase quickened to a three-month high that was only slightly slower than the peaks seen in March and April,” S&P Global said.
Maryam Baluch, S&P Global Market Intelligence economist said the latest PMI survey of around 400 manufacturers in the country indicated a loss in growth momentum.
"Overall, muted growth across the Filipino manufacturing sector, adds caution to the air as inflationary pressures continue to heat up,” Baluch said in a statement on Monday, August 1.
In July, the seasonally adjusted Output and New Orders Indexes dipped below the no-change mark for the first time since January.
“The rates of reduction were modest but signified a visible change from the strong expansions seen in June, amid challenging demand conditions,” S&P Global said.
Additionally, client demand from foreign markets weakened further last month, but the pace of decrease was the softest in the current five-month sequence of contraction.
Global uncertainties and the ongoing impact of the pandemic continued to weigh on export demand, S&P Global said.
Moreover, with business requirements receding and prices rising, forcing firms to be unenthusiastic to make purchases. Buying activity was muted throughout July, with the rate of increase only fractional overall.
While a slowdown was apparent, S&P Global noted that firms raised workforce numbers for the third successive month.
“Efforts to expand capacity were successful as backlogs of work continued to decline in July. The rate of depletion quickened from June, as anecdotal evidence stated lack of new orders and sufficient capacity allowed firms to clear existing backlogs,” it said.
Meanwhile, stocks of purchases increased for the 11th month running in July. However, the rate of accumulation eased, with the latest pace of increase the joint-slowest since October last year. Similarly, stocks of manufactured items grew at a weaker pace.
July data also highlighted a further deterioration in vendor performance, as firms noted that lead times lengthened to the greatest extent in four months. Logistical challenges, shipment delays and port congestion were some of the reasons blamed for delays.