Philippines - Philippine manufacturing down in August

Philippine manufacturing expanded at a slower pace for the second consecutive month in August as part of the cooling period ahead of the surge in demand later in the year, according to The Asian Centre for Enterprise Development Inc.

In an e-mail to this reporter, Ascend said the purchasing managers’ index fell further to 55.70 in August from 57.50 in July, marking the fourth consecutive expansion after contracting in April.

An index of more than 50 represents growth in the manufacturing sector, while a reading under 50 signifies a contraction. A reading at 50 indicates no change.

“The slight dip in August 2011 follows the normative trend where manufacturers make adjustments in their inventory in preparation for the expected surge in demand starting in October through December,” said the research arm of the Philippine Institute of Supply Management, which issues the PMI.

The PMI has been above the growth threshold for the year except in April when the index fell below it because of the disaster in Japan and the political crises in the Middle East.

All five major composite variables of the PMI stayed in growth mode last month, but the expansion in new orders, production, inventories and supplier deliveries slowed. Employment went up by 1.1 index points, the only variable with a positive direction.

“Many companies are gearing up for a possible uptrend in production and new orders,” Ascend said.

Three of the 12 sub-sectors of manufacturing registered month-on-month contraction in their business activities, such as paper, machinery and equipment as well as communications and medical equipment.

Five industries showed faster growth such as food and beverages, publishing and printing, non-metallic minerals, fabricated metals, and communication and medical equipment.

The RW Index has stayed above the threshold since February 2010.

The services index went down in August to 59.5, or 7.19 points lower than July when it posted its highest level for the year. It was the worst performance of the index since posting a 59.3 growth in January this year.

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