The Philippines manufacturing sector showed resilience in its expansion during July, according to the latest data from the Philippine Statistical Authority (PSA). Despite the prevailing softness in producer prices, the manufacturing sector recorded a notable increase in production value. Specifically, the value of the manufacturing production index rose 4.7% in July compared to the same month in the previous year.
Additionally, the volume of production index recorded a growth of 2.1%. This expansion indicates a solid footing for the Philippines manufacturing sector amidst challenges in the broader economic landscape. Significantly, the output of technological goods, particularly in the computer, electronic, and optical products sector, played a crucial role in bolstering the manufacturing growth observed in July.
The PSA highlighted that the acceleration in year-on-year growth for manufacturing was primarily due to the impressive double-digit growth rate in this specific industry, which stood at 14.4%. Moreover, the food-products segment of the manufacturing sector experienced a remarkable output increase of 14.6% year-on-year in July, underscoring the sector's vitality and adaptability to market demands. Within the classification of 22 Philippine industrial sectors, 14 of them recorded growth, indicating a robust performance across multiple areas.
However, it is worth noting that eight sectors contracted during the same period, revealing a mixed performance landscape in the manufacturing realm. The basic metals sector faced a significant setback, with output falling by 19.1%, while production of other non-metallic mineral products dropped by 15% year-on-year. On the price front, the Philippines' producer price index (PPI) remained in negative territory, with a reported decline of 0.4% in July compared to the previous year.
This modest deflation trend has been a consistent theme throughout 2024. Historically, the nation’s PPI had shown mild deflation in the years preceding the COVID-19 pandemic, followed by a peak inflation rate of 8.2% recorded in July 2022. Since that peak, however, the PPI has exhibited a steady cooling trend. In an additional indication of the manufacturing sector's health, the headline Philippines manufacturing purchasing managers index (PMI) registered at 51.2 in August, which holds steady from July.
This figure remains above the critical 50-mark threshold that indicates growth rather than contraction, as reported by S&P Global in early September. According to S&P Global, the strength of the Philippines manufacturing sector has now persisted for an entire year, showcasing its resilience and adaptability in the face of varying economic challenges..