PH manufacturing growth rises in May
Credit to Author: ANNA LEAH E. GONZALES| Date: Mon, 03 Jun 2019 16:30:44 +0000
Manufacturing companies in the country saw their operations improve last month as the accelerated growth in new orders encouraged businesses to increase production, an IHS Markit/Nikkei survey found.
Results of the survey released on Monday showed that the seasonally adjusted manufacturing Purchasing Managers’ Index (PMI) climbed to 51.2 in May from 50.9 in April, signaling a “modest, but stronger, improvement in the health of the manufacturing sector.”
The PMI is a composite index that represents the weighted average of new orders, output, employment, suppliers’ delivery time and stocks. Readings above 50 signal an expansion; below that, a contraction.
Despite the improvement, the latest figure is still lower than the 51.5 registered in March, 51.9 in February and 51.7 in January, as well as 53.7 in May 2018.
“Filipino goods producers reported an improved picture in May, as output growth strengthened amid a sharper increase in new orders,” IHS Markit economist David Owen said.
“Firms were helped by a rise in foreign demand for only the second time since last September as the global trade war intensification led to weaker export conditions. This should ease some nerves in the wake of further tariffs announced by the US and China,” he added.
His statement comes after China hit $60 billion worth of US goods with new punitive tariffs ranging from 5 to 25 percent, in retaliation for Washington raising duty on $200 billion in Chinese goods to 25 percent.
US President Donald Trump launched the trade war last year in a bid to reduce the US trade deficit with China and force Beijing to undertake economic reforms, accusing it of seeking to dominate global industries with unfair state subsidies and of acquiring American technology through theft or forced transfers.
Since then, the world’s two largest economics have exchanged tit-for-tat tariffs on two-way trade worth hundreds of billions of dollars.
While both sides have sought to find a resolution through several rounds of negotiations, they appear to have stalled after the latest meetings ended without a deal.
Meanwhile, output growth moderately increased during the month, with 21 percent of firms reporting expanded output.
“According to panelists, this was linked to a stronger rise in new orders, as well as new products and branch openings,” the report said.
New orders received by manufacturing firms were the highest in four months, although they were still weaker than the series average.
“Firms commented on acquiring new customers and product launches, leading to the uplift in sales,” IHS Markit/Nikkei said.
The seasonally adjusted new export orders index, on the other hand, rose above 50, which IHS Markit/Nikkei said followed the joint-quickest drop in export orders in the survey’s history in April.
Greater demand from foreign customers was cited as the main reason for the increase.
According to IHS Markit/Nikkei, supply-side pressures also continued to ease during the month as lead times on inputs shortened. The easing port congestion allowed suppliers to deliver goods on schedule.
The survey, however, noted that employment fell at the sharpest rate in 15 months.
“Of the firms giving anecdotal reasons, the majority mentioned a number of resignations. Overall, this marked the third successive fall in job numbers, although March and April data indicated only fractional reductions,” it said.
In terms of prices, the report revealed that price pressures “remained subdued” during the month.
“The rate of input price inflation edged down to the weakest in 39 months, while some panelists mentioned increased agricultural prices due to [the] recent weather disruption. Firms, meanwhile, elevated selling charges at the fastest pace since January,” it said.
The report also said business sentiment toward the year ahead also improved, as 59 percent of firms projected an increase in activity in the next 12 months.
This, IHS Markit/Nikkei said, was due to the growth in new orders, both domestically and overseas, and new stores and product launches.
WITH AFP
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