The Philippines’ manufacturing sector bucked the regional trend in May and saw its purchasing managers’ index (PMI) rise to 54.3, the highest so far this year, on the back of a robust domestic demand.
The latest Nikkei Philippines Manufacturing PMI showed an improvement last month from April’s 53.3.
“The Philippines manufacturing sector remained firmly in expansion territory in May, underpinned by robust output growth and new orders. Buoyant domestic demand and business optimism augur well for the strong growth momentum to be sustained as we approach the end of the second quarter,” Bernard Aw, economist at IHS Markit, said in a statement.
Growth in export sales was recorded at a much slower rate compared to total new orders, suggesting that the domestic market continued to be the main engine of manufacturing growth, Aw said.
In a separate report, Capital Economics said that among seven emerging Asian economies covered by the monthly Nikkei PMI report, “the headline figure dipped in all but the Philippines.”
The six other countries referred to by Capital Economics were Malaysia, Myanmar (Burma), South Korea, Taiwan, Thailand and Vietnam.
“However, Vietnam and Philippines are the only countries where the May headline PMI was below last year’s average,” Capital Economics said.
Aw said the weaker peso didn’t noticeably boost foreign demand but led to higher imported inflation in May.
“Input cost increases remained elevated, although there were signs of easing inflationary pressures. Greater costs prompted firms to raise charges further to protect their margins,” Aw said.
“That said, there is ongoing slack in the manufacturing economy as backlogs continued to fall despite solid increases in output and orders. In part, sustained employment growth ensured that operating capacity remained sufficient to meet demand. Business optimism and a healthy sales pipeline hint that the robust hiring pace is likely to continue. Furthermore, ongoing public infrastructure spending and domestic consumption should continue to support manufacturing activity in the coming months,” Aw added.