The Philippines’ manufacturing sector’s Purchasing Manager’s Index (PMI) remained high in July based on the IHS Markit’s Manufacturing data released on Wednesday.
Although the country’s manufacturing score last month slowed down to 50.9 from its PMI of 52.9 in June, the Philippine manufacturing sector remains among the most active in ASEAN.
Within the region, countries that recorded manufacturing growth include Vietnam, the Philippines, Indonesia, Singapore, and Thailand. These nations posted manufacturing index between 50.1 and 54.9.
On the other hand, the manufacturing sectors of Malaysia and Myanmar showed declining activities last month with PMI of 49.7 and 47.9, respectively.
Manufacturing PMI scores of 50 and above show the sector’s growth while below 50 means deterioration.
IHS Markit’s report noted that the lower score of the Philippines’ manufacturing sector last month was brought by weaker pace in output and new orders.
Accumulation of input stocks was milder in July as companies were reluctant to hire more workers and slowed down purchasing activity due to inflationary pressure.
“Slowing demand presents a worrying development and raises questions whether the recovery from the rollout of new excise taxes at the start of the year is losing steam,” said IHS Markit Principal Economist Bernard Aw.
“One area where the TRAIN (Tax Reform for Acceleration and Inclusion) law [is] still felt strongly is prices,” Aw added.
He mentioned that external factors such as increasing world oil prices and the strengthening of dollar against the Philippine peso are also driving up inflation.
“Input cost inflation remained marked in the manufacturing sector in July which, in turn, led to further increases in selling prices. Although charges were raised at a notable pace, the rate of increase remained far weaker than the costs, suggesting pressure on profit margins,” the economist said. (PNA)