Philippine factory growth showed recovery in June from May’s notable loss as production improved, and new orders increased at a faster rate.

According to the latest data from debt watcher S&P Global, there was a “slight revival in the Filipino manufacturing sector” last month following a notable loss in growth momentum in May.

It noted, however, that while the “upswing in new orders was sufficiently robust to push production levels back into expansion territory,” it was only at a minimal rate.

Data from S&P Global revealed in June that the manufacturing sectors posted stronger demand and higher production needs, leading firms to step up their purchasing activity.

Based on the report, the Philippines’ purchasing managers’ index (PMI)—an overall single-figure indicator of how the manufacturing sector is performing—climbed to 50.7 from 50.1 previously. The debt watcher said this reflects “a stronger, albeit still modest improvement in the health of the Philippines manufacturing sector.”

“Improvements across the goods-producing economy were signaled for a third month running,” it added.

Apart from growth in production and purchasing activity, employment in the production sector also picked up during the month, rising for the first time in four months. It was the fastest pace of hiring since last November, driven by stronger demand.

Despite improvements, Maryam Baluch, economist at S&P Global Market Intelligence, said that “the overall performance of the Filipino manufacturing sector remained relatively subdued as the first half of the year concluded.”

“While new orders continue to rise, they do so at a historically muted pace, weighed down by a stalled exports picture. Additionally, supply-side challenges, such as delayed delivery times for inputs and material shortages, impacted production capacity,” Baluch said.

Baluch noted that the next few months will be “important” in determining if the sector can return to last year’s growth levels. Easing inflation and steady demand may support this by giving Filipino manufacturers more room to adjust prices.

However, historically muted business confidence suggests a more subdued path for the year ahead,” Baluch added.