PH manufacturing growth quickens in May

Philippine manufacturing recorded an improvement in May from the eight-month low logged in April to mark the 16th straight month of expansion, results of the latest survey conducted by S&P Global released on Thursday showed.

The headline S&P Global Philippines Manufacturing PMI stood at 52.2 in May, still above the 50.0 threshold that separates expansion and contraction, and an improvement from the 51.4 in April.

“The upturn was supported by a solid rise in both output and factory orders, which firms also expanding their workforce numbers for the first time in four months,” S&P Global Market Intelligence economist Maryam Baluch said in a commentary.

“More encouragingly, vendor performance improved in May for the first time in almost four years. Companies reported that improved logistics routes helped shorten delivery times,” she added.

Survey results indicate that new orders grew on the back of stronger demand conditions and the acquisition of new clients, and demand from foreign markets also fared well with export volumes posting solid growth, albeit at a slightly softer pace versus the previous month.

Hiring activity also posted the strongest performance in four months and at the strongest pace since October 2022.

Buying activity increased for the ninth straight month, while firms purchased additional inputs in a bid to meet the growing demand. Firms were also keen to hike their inventory levels, with pre-production items increasing further.

“(T)he latest data did signal a re-intensification of price pressures in May, rates of inflation were weaker than their historical averages,” Baluch said.

“In terms of future output, firms remain largely upbeat, though confidence did take a slight hit and dipped to an 11-month low,” she added.

Inflation stood at 6.6% in April, slower than the 7.6% in March. The government has yet to release official inflation figures for the month of May.

In a separate commentary, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael Ricafort said the latest improvement may have to do with the easing trend in prices and inflation.

“Further easing of the year-on-year inflation and in global/local interest rates later this year and into next year would also support some pick up in manufacturing activities for the coming months, on top of the further reopening of the Philippine economy towards greater normalcy with no more large scale lockdowns,” he said.

The Monetary Board of the BSP earlier this month paused its policy tightening, citing the stabilization of inflation which cooled to 6.6% in April.

Prior to this, the central bank hiked key policy rates by 425 basis points since May 2022, with the latest being a 25-basis point increase that took effect on March 23 to bring the benchmark rate to 6.25%. —VAL, GMA Integrated News