MANILA: Philippines manufacturing economy ended last year on a high, it started 2018 on a more modest note as demand was partially hurt by new excise taxes, according to the latest PMI surveys. But the survey’s forward-looking indicators suggest this hit to demand is likely to be temporary.
The Nikkei Philippines Manufacturing PMI™ slipped from 54.2 in December to 51.7 in January, signalling a more modest improvement in the health of the sector than the solid gains seen in recent months. The latest reading was the third-lowest in the two-year survey history.
Growth of both output and new business weakened markedly in January, alongside the smallest rise in employment since the declines recorded last summer.
Firms’ responses to the survey revealed that the new excise taxes, effective January 2018, were a major factor behind the slowdown in business activity growth in January, weighing on client demand by pushing prices higher.
More encouragingly, other survey indicators suggest that firms are looking past the near-term slowdown towards stronger growth in the year ahead. The Future Output Index remained elevated, with the majority of businesses anticipating higher production over the next 12 months.
