The country’s manufacturing sector is on the top of the list of performing countries in Southeast Asia, despite ‘slight deterioration’ in business conditions in the region.
According to a report from IHS Markit, a London-based global information provider, the Philippine manufacturing sector’s purchasing managers’ index (PMI) of 52.3 ranked number one among the list of manufacturing PMI in the Southeast Asian region for January 2019.
A composite index that measures the health of a country’s manufacturing sector, PMI is calculated as a weighted average of five individual subcomponents. Growth in the manufacturing industry is usually seen in readings above the 50-threshold while below 50 indicates deterioration in the sector.
Ranking second and third, respectively, are Vietnam and Myanmar, which both registered a PMI of 51.9. Thailand follows at the fourth spot with a PMI of 50.2.
Other countries, however, recorded a contraction in their manufacturing sector. This includes Indonesia, with a PMI of 49.9; Malaysia, 47.9, and Singapore, 45.6.
Fast growth of the Philippines’ manufacturing sector
IHS Markit attributes the Philippines’ performance to the sector’s fast growth. Despite seeing a slow activity for manufacturers in the country, IHS Markit economist David Owen said that the strength of the country’s domestic market would likely keep the manufacturing sector on top shape.
However, compared with last month’s PMI of 53.2, this month’s PMI has decreased.
Owen said that the year 2019 started slowly for Filipino manufacturers as purchasing activity grew at its weakest rate throughout the series’ history and employment declined for the first since July. Furthermore, he said that export orders fell for five successive months, adding fears that exports could slow even further in the first quarter.
Strong domestic market
However, the Philippines’ strong domestic market will carry the industry through a potentially turbulent period, Owen added.
The Philippines also registered the ‘greatest level’ of optimism in the IHS Markit report. The least level was recorded with Myanmar.
On average, Southeast Asia has experienced a ‘slight deterioration’ in business conditions, with an average PMI of 49.7. This month’s PMI has decreased from December 2018’s PMI of 50.3.