THE Philippine manufacturing sector grew fast enough to regain its spot as the top performer in Asean despite the “slight deterioration” in business conditions in the region, according to a report by IHS Markit.
Reports from IHS Markit said on Monday that the Philippine manufacturing sector’s purchasing managers’ index of 52.3 topped the list of manufacturing PMI in the region for January.
The PMI is a composite index aimed at gauging the health of the country’s manufacturing sector. It is calculated as a weighted average of five individual subcomponents. Readings above the 50-threshold signal a growth in the manufacturing sector, while readings below 50 indicate deterioration.
Trailing the Philippines are Vietnam and Myanmar, which both registered a PMI of 51.9, followed by Thailand’s 50.2. Countries that recorded a contraction in their manufacturing sector are Indonesia with a PMI of 49.9; Malaysia, 47.9; and Singapore, 45.6.
On average, the region experienced a “slight deterioration” in business conditions in January as PMI averaged 49.7, from the 50.3 recorded in December.
IHS Markit said this sends the signal that conditions across the manufacturing industry worsened at the start of 2019. This is also the second deterioration of the average PMI of the region.
Despite topping the list, the Philippines was not spared from the slowdown, as its PMI slipped from 53.2 in December to 52.3 in January.
IHS Markit economist David Owen said that, while slow activity is seen for manufacturers in early 2019, the Philippines’s strong domestic market is likely to keep the country’s manufacturing sector leading the pack.
“January data suggested a slow start to the year for Filipino manufacturers. 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 during 2018. This news may add to fears that exports could slow even further in the first quarter,” Owen said.
“Nevertheless, strength in the domestic market should carry the industry through a potentially turbulent period,” he added.
The report also noted that the Philippines recorded the “greatest level” of optimism, while Myanmar recorded the least.
Overall, the level of positive sentiment regarding the 12-month outlook rose to its highest since last May. In general, firms were hopeful that new orders will rebound and output growth will accelerate this year.
Image credits: Nonie Reyes