The Philippine manufacturing sector posted a slight decline in August due to a drop in production, results of the monthly IHS Markit Survey released on Monday showed.
The PMI is a composite indicator of the manufacturing sector’s performance, with 50.0 as the threshold. A reading above 50 indicates growth, while below 50 is a contraction.
“Latest PMI figures showed that growth in the Philippines manufacturing sector was largely similar in both July and August,” David Owen, economist at IHS Markit, said in an explanatory note.
“While sales growth was down from the previous month, greater hiring activity meant that the headline reading dropped only slightly to 51.9 (from 52.1),” he said.
While sales remained strong overall, several firms were impacted by monsoon rains as well as a drop in demand from foreign clients during the period.
“Some firms noted a slowdown in customer demand due to monsoons during August. This also led to a slight deterioration in supply chain efficiency as lead times increased marginally,” said Owen.
“Nevertheless, firms were still able to increase stock levels,” he added.
Owen noted, however, that the Philippines must look into the continuous drop in orders overseas.
“One note of caution from the data was another moderate fall in export demand. New orders from abroad have now fallen in ten out of the last 12 months, as trading conditions in the region remain difficult due to the US-China trade war,” he said.
“The economy is subsequently relying on strong domestic sales to stop growth from falling any further.”
The government figures on manufacturing for July, or the results of the Monthly Integrated Survey of Selected Industries (MISSI), will be released on October 10. —Jon Viktor Cabuenas/VDS, GMA News