The Philippines’ manufacturing PMI slipped in August, an IHS Markit/Nikkei survey found, as output and new orders slowed.
Results released on Monday showed a seasonally adjusted Purchasing Managers’ Index of 50.6 for the month, down from 52.8 in July and from 55.3 a year earlier.
The latest reading is also the lowest since the survey was first conducted in January 2016.
The PMI is a composite index representing the weighted average of five individual sub-components: new orders, output, employment, suppliers’ delivery time and stocks.
Readings above 50 signal an expansion in manufacturing while readings below the benchmark signal a contraction.
IHS Markit economist Bernard Aw said Philippine manufacturing lost further momentum in the face of softening demand from both domestic and external sources, during August.
“Growth in output and new orders were both recorded at noticeably slower rates. The softer growth in demand led to a fall in employment–the first time in the survey history,” he said.
Aw, nevertheless, said that while short-term prospects appeared increasingly weak, longer-term expectations remained optimistic.
The majority of surveyed companies continue to anticipate output growth over the next year, he pointed out, suggesting that the recent slowdown could be temporary.
“However, there is a need to monitor the situation of raw material shortages, which had affected production schedules, resulting in slower output growth,” he stressed.
Lastly, Aw said that as for jobs prospects, an ongoing lack of capacity pressure — as signalled by a persistent fall in backlogs — meant that Filipino manufacturers likely weren’t in a hurry to boost hiring.