PH factory activity expansion accelerated in May

MANILA  -Manufacturing activities in the Philippines expanded faster in May to an eight-month best as both new orders and production expanded at quicker rates, bringing the S&P Global Philippines Manufacturing PMI (purchasing managers index) to 52.2 in May from 51.4 in April.

In its latest month update, S&P Global said that the Philippine manufacturing sector picked up momentum again in May after some loss in April, although the latest figure was still lower than the 52.5 recorded in March.

This was the 16th month in a row that the PMI was above 50, which means an overall increase (more positive responses than negative).

Less than 50 means an overall decrease (more negative answers than positive).

Maryam Baluch, an economist at S&P Global Market Intelligence, said the headline PMI figure picked up after printing an eight-month low in April to signal a quicker improvement in operating conditions.

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“The upturn was supported by a solid rise in both output and factory orders, with firms also expanding their workforce numbers for the first time in four months,” Baluch said.

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

Bright prospects

She added that while the latest data did signal a resurgence of price pressures in May, rates of inflation were weaker than their historical averages.

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

The S&P Global PMI for the Philippines is based on a survey of managers at 400 companies who decide on choosing suppliers and buying supplies of production inputs.

S&P’s PMI is a weighted average of five indices—30 percent based on new orders; 25 percent on output; 20 percent on employment; 15 percent on supplier delivery times; and 10 percent on stock purchases.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said the latest improvement in the Philippine PMI may have been helped by the recent easing trend in inflation and some increased demand during the summer season when there were better weather conditions.

“For the coming months, other positive factors (that could help further improve the PMI) include the economic reopening narrative in China, which is among the biggest trading partners and export markets of the Philippines,” Ricafort said.

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