Manufacturing growth slips to 10-month low in June

Philippine manufacturing growth decelerated in June to reflect the softer expansion in both output and new orders, according to the results of the latest survey by S&P Global released on Monday.

The headline S&P Global Philippines Manufacturing PMI stood at 50.9 in June, down from 52.2 in May and the weakest expansion in 10 months since July 2022. It was still, however, higher than the 50.0-threshold that separates growth from contraction.

“The muted headline figure reflected softer rates of expansion across both output and new orders, while manufacturing employment registered a fresh reduction,” S&P Global Market Intelligence economist Maryam Baluch said in a commentary.

“With inflationary pressures fading and global economic uncertainties still a looming threat to growth, the central bank maintained their policy rate at 6.25% for the second successive policy meeting in June,” she added.

The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) on June 22 decided to keep policy rates unchanged, with risks to inflation seen leaning towards the upside.

Inflation is expected to average 5.4% this year, higher than the government’s target range of 2% to 4%. It is then seen to slow down to 2.9% in the following year.

Results of the S&P Global survey showed that output growth recorded a fractional increase to mark the slowest rise since September 2022, while new orders posted modest gains despite additional demand from new and foreign clients.

The slower growth in output drove a fresh contraction in employment figures after the job creation recorded in the previous month, on the back of the non-replacement of voluntary leavers and firms actively reducing payroll numbers.

“Going forward, the sector remains optimistic of growth in the coming 12 months. However, global headwinds could dampen the outlook for manufacturers in the Philippines,” Baluch said.

The Philippine Statistics Authority (PSA) is scheduled to release official government figures on manufacturing on August 8, 2023. —KBK, GMA Integrated News