THE country’s manufacturing performance improved on the back of increased foreign demand for Filipino goods, among others, according to Standard & Poor’s Purchasing Managers’ Index (PMI).
PMI picked up to 51.9 in July from 50.9 in June. S&P Global Market Intelligence economist Maryam Baluch said this marked a stronger improvement in operating conditions at the beginning of the third quarter.
S&P Global Market Intelligence said there was anecdotal evidence that the customer base for Filipino goods increased and led to new export orders that helped PMI accelerate to a three-month high.
“[The] continued improvement in the underlying demand picture helped drive the latest upturn, with both production and new orders recording stronger rates of expansion. New export orders also increased during July,” Baluch said.
“Moreover, though July data reported a slight intensification of price pressures, rates of both input price and output charge inflation have eased considerably from the highs seen over the last three years. The latest data adds to our current forecast that the central bank will abstain from further tightening its monetary policy in the near term,” she added.
Rizal Commercial Banking Corporation (RCBC) Chief Economist Michael L. Ricafort also said the latest PMI level means the index has been expanding or was above 50 for 23 straight months since September 2021.
This, Ricafort added, was also the fastest in two months and was an improvement from the 50.8 level posted in July 2022.
He said the PMI is expected to continue expanding, especially now that President Marcos lifted the Covid-19 state of public health emergency throughout the country. This leads to more business and economic activities, as well as faster expansion in manufacturing.
“For the coming months, other positive factors include the economic reopening narrative in China [Covid restrictions eased since December 2022], which is the world’s second largest economy and among the biggest trading partners and export markets of the Philippines,” Ricafort said.
Earlier, the Philippine Statistics Authority (PSA) said the Volume of Production Index (VoPI) registered a year-on-year increment of 8.1 percent in May 2023.
This rate is faster than the annual increase of 7.7 percent in the previous month. In May 2022, however, VoPI contracted by 0.6 percent.
The expansion in the annual growth of VoPI in May 2023 was mainly contributed by the annual upturn in manufacture of electrical equipment with 53.7 percent during the period from 19.2 percent in April 2023.
The manufacture of electrical equipment shared 27.3 percent to the annual acceleration of VoPI of the manufacturing sector in May 2023.
Image credits: Nonoy Lacza