Domestic manufacturing registered a higher PMI reading of 54.3 in May, up from 53.3 in April and the highest for the year, indicating “another strong upturn for the sector.”
A reading above 50 indicates improving business conditions and expansion while a reading of below 50 indicates the opposite.
Business conditions among Philippine factories are better in May compared to Myanmar, that registered a PMI reading of 52 during the month, Vietnam (51.6), Indonesia (50.6), Thailand (49.7), Malaysia (48.7) and Singapore (48.7).
IHS Markit, which compiled data for the index, said there was robust growth in both output and new orders alongside higher employment and buying levels among Philippine manufacturers.
Strong client demand and business optimism also prompted firms to build inventories at a faster rate.
“The Philippines manufacturing sector remained firmly in expansion territory during May, underpinned by robust output growth and new orders. Buoyant domestic demand and business optimism augur well for the strong growth momentum to be sustained as we approach the end of the second quarter,” said IHS Markit economist Bernard Aw.
“Growth in export sales was recorded at a much slower rate compared to total new orders, suggesting that the domestic market continued to be the main engine of manufacturing growth,” he added.
Conditions in the ASEAN manufacturing sector, meanwhile, weakened slightly in May as indicated by a lower ASEAN Manufacturing PMI reading of 50.5 from 51.1 in April.
IHS Markit noted weaker increases in both output and new business. The Philippines was the only country to see operating conditions improve at a quicker pace in May.
Unlike in the Philippines, domestic demand was softer in other ASEAN countries during the reference period.
“A key concern is that the upturn has become uneven across the region, accompanied by a slowdown in domestic demand. Fewer nations covered under the survey reported an improvement in manufacturing conditions in May,” said Aw.
“If this trend continued, employment prospects across the region are likely to be affected, especially when evidence of spare capacity in the sector is expected to hold back hiring,” he added.
