In this June 23, 2016 file photo, products of Atsui are designed and crafted in its factory in Baras, Rizal. Photo by Eloisa Lopez
MANILA — The manufacturing sector sustained growth in June although at a slower pace than a month ago, auguring well to robust economic growth in the second quarter, the latest Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI) released Monday showed.
The PMI reading of 53.9 last month meant there was an overall increase in manufacturing activities, the second highest so far this year after the 54.3 registered in May.
“The Philippines’ manufacturing sector signaled another strong expansion in June, ending the second quarter on a positive note. Growth in output and new orders remained key drivers, which in turn boosted hiring and stock-building. Export growth strengthened and business optimism remained elevated,” IHS Markit, which compiles the survey, said in a report.
The “solid performance” of manufacturing last June “put the domestic economy on track for another quarter of robust GDP [gross domestic product] growth,” IHS Markit economist Bernard Aw said in a statement.
The GDP grew 6.4 percent during the first quarter, slower than expectations but still among the highest among emerging economies in the region. The government targets 6.5-7.5 percent GDP expansion this year.
Aw said that “while the domestic market remained the key pillar of manufacturing growth, there were signs that external demand is contributing more to the expansion” such that “export order growth strengthened to a three-month high” in June.
“The strong manufacturing upturn was matched with rising cost pressures but there were signs of further easing of the inflation rate. Slower cost increases took some pressure off the need for companies to raise selling prices. That led to the weakest increase in average charges for Filipino products since last January. Nonetheless, firms highlighted that recent peso depreciation and higher costs for raw materials such as copper and iron remained an issue,” Aw added.
Moving forward, “the outlook for the manufacturing sector remains optimistic into the third quarter, underpinned by buoyant business confidence and strong sales volumes,” Aw said, adding that robust manufacturing will support the economy as well as job generation. SFM