PH manufacturing growth slows
Philippine manufacturing growth slowed markedly in July, global research firm IHS Markit said on Wednesday as it released the results of the latest Nikkei Philippines Puchasing Managers Index (PMI).
The latest reading of 50.9 —down from 52.9 a month earlier — “was the lowest for five months and represented only a marginal improvement in the health of the sector,” IHS Markit said.
Results above 50 point to an economic expansion while a reading below that indicates a contraction. The indicator is drawn from a poll focused on output, new orders, jobs, inventories and delivery times.
“New business grew at a much slower rate in July after a solid second quarter, despite a strong pick up in export sales,” said IHS Markit principal economist Bernard Aw.
“Input cost inflation remained marked in the manufacturing sector during July which, in turn, led to further increases in selling prices.”
New business intake was said to have slowed to its weakest pace in survey history despite a surge in export sales. Slower overall sales led to a reduction in production volumes and output growth hit a six-month low, IHS Markit said.
“That said, there was anecdotal evidence that input shortages disrupted production activity,” it noted.
With demand having softened, purchasing activity also fell to its weakest in six months, contributing to a rise in inventories. Shorter delivery times were also reported for the first time since March.
Lower backlogs pointed to a continued slack in manufacturing, HIS Markit said, adding that the “latest decline in unfinished business was the steepest for 10 months”.
The spare capacity affected hiring and payrolls were leaner for a second straight month, although respondents said that resignations were a factor.
“Higher prices for raw materials, such as diesel, plastics and rice, a weaker peso and effects of the TRAIN regulations all contributed to input cost inflation, which remained well above that seen in recent years,” IHS Markit said.
“Greater cost burdens led firms to raise selling prices further in July,” it added.
Business expectations remain elevated but fell to the lowest in survey history, the research firm said.
“Where optimism was recorded, new products, higher sales forecasts, solid construction activity, planned business expansions and increased marketing efforts were all reported as reasons,” it added.
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