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Manila Bulletin devider Business devider Factory activity slows to lowest level in three months

Factory activity slows to lowest level in three months

Published Jul 1, 2024 04:42 am

Local factory activity further slowed down in June amid a softer uptick in factory orders and a second consecutive drop in employment, S&P Global reported.

The Philippines’ S&P Global Manufacturing Purchasing Managers' Index (PMI)—a comprehensive gauge of the industry’s performance—posted a three-month low of 51.3 in June from 51.9 in May.

S&P Global said the decline was driven by several factors. First is the recent softening of underlying demand trends, which was the second-weakest in the current ten-month sequence
of growth.

Additionally, export sales declined to a three-month low due to slower demand from foreign clients.

On the other hand, the increasing spare capacity forced firms to slash their workforce numbers in June with reports of non-hiring for the job positions of voluntary leavers.

Nonetheless, production picked up faster in July, the strongest pace in six months, as the rate of input price inflation remained weaker than it had been in past months despite a fresh rise in factory costs.

As a result of rising production and possible increase in activity, S&P Global said companies in the Philippines responded by raising their buying activity.

Maryam Baluch, S&P Global Market Intelligence economist, said the recent cooling in demand conditions might indicate weaker upticks in output into the second half of the year.

Baluch said that while the output activity fed through to higher purchasing activity, it still failed to translate into job creation.

"Inflationary pressures remained in check, despite a renewed rise in operating costs. Relatively soft and subdued upticks in costs and charges could help the sector generate demand in the coming months,” she said.

Despite this, S&P Global noted that the first half of 2024 further improved in operating conditions across manufacturing sectors.

“Manufacturers maintained a positive outlook for production over the coming year, with hopes that improved demand conditions would support further output expansions,” Baluch stated.

“However, the level of optimism dimmed from May's recent high and was weaker than the series average,” she added.

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manufacturing sector Purchasing Managers’ Index
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