PH manufacturing, exports growth slows as China economy weakens

Manufacturing growth slowed to its lowest in four months in January as export orders declined mainly due to a slower Chinese economy, the latest Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI) released Friday showed.

The seasonally adjusted PMI declined to 52.3 last month from 53.2 in December last year, posting a second straight month of decline.

Since the January PMI score was above 50, it still indicated an overall increase in manufacturing activity. However, it was the lowest PMI since October’s 54.

“Output grew solidly but at the softest pace in four months. New order growth remained sharp, but export demand fell for the fifth month running,” global research firm IHS Markit said in a report.

IHS Markit economist David Owen said the January data suggested a slow start for the year for manufacturers in the Philippines.

“Purchasing activity grew at the weakest rate throughout the series history, while employment declined for the first time since July. Export orders fell for the fifth month in a row, as China, their top export destination, reported slower growth in 2018,” Owen said.

“This news may add to fears that exports could slow even further in the first quarter. Nevertheless, strength in the domestic market should carry the industry through a potentially turbulent period,” he added.

Separately, in a Jan. 29 report titled “Trade war: Some Asia winners but not in short run,” Oxford Economics economist Sian Fenner said the Philippines was among the Asia-Pacific countries that stand to benefit from trade diversion if the US-China trade war pushes through.

“Based on country RCAs (revealed comparative advantage), we also see some potential for some modest gains from trade diversion for Malaysia, Thailand, and the Philippines. Both Malaysia and the Philippines score high RCAs in electrical machinery, including electrical circuits. Exports in both countries have been buoyed in recent years by lower costs of production and foreign investment, which have led to an increase in the market shares of electronic exports since the Global Financial Crisis, at the expense of Thailand and Singapore,” the UK-based Oxford Economics said.