The growth of key industries may be more muted in the coming quarter amid supply constraints, according to production indices tracked by the central bank.
In a new report, the Bangko Sentral ng Pilipinas (BSP) said the composite Purchasing Managers Index (PMI) for the manufacturing, services, and retail and wholesale trade sectors declined in the second quarter of the year, further jeopardizing the government’s official growth targets for 2014.
“The results of the monthly PMI survey suggest that domestic output continued to grow in April 2014, albeit at a slower pace,” the BSP said.
The composite PMI remained firmly above the 50-point threshold at 57.2 points from 62.1 in March 2014 and 57.4 in April 2013, respectively.
The PMI index, which is reported by the Philippine Institute for Supply Management, serves as a reliable indicator for business activity.
Any PMI score above 50 indicates the expansion for a specific industry in the coming months.
Manufacturing PMI was 53.7 in April 2014, lower than the 55.7 points and 56.2 points registered in March 2014 and April 2013, respectively.
“Firms in the manufacturing industry reported a slowdown in business activities due to fewer working days,” the BSP said. New orders, production, supplier deliveries, and inventories have also slowed down, while employment increased slightly relative to first quarter levels.
Services PMI in April 2014 likewise fell to 59.5 from 66.1 in March 2014, but was higher than 58.5 in April 2013.
The score declined relative from March due mainly to fewer orders during the Holy Week break.
For wholesale and retail trade, the PMI decreased to 54.3 in April 2014 from 57.8 in March 2014 and 54.8 in April 2013.
The BSP remained confident that the country would keep growing at a healthy pace, despite the lower PMI scores.
The International Monetary Fund (IMF), for its part, expects the economy to grow by at least 6.5 percent this year, matching the low end of the state’s target of 6.5 to 7.5 percent.
The multilateral lender releases its updated World Economic Outlook (WEO) this month, and officials have said forecasts for the Philippines may be downscaled given the disappointing first quarter.