Manufacturing and services activities charge ahead in June

• Manufacturing sector PMI at 51.9 index points while services came in at 61.9

The Purchasing Managers’ Index (PMI) for June showed manufacturing activities had continued to expand while the services sector growing at an accelerated pace, supported by strong lending activity made possible from lower interest rates.
According to the PMI, the manufacturing sector recorded an index value of 51.9 for June, compared to 55.5 in May, reflecting continued expansion in activities, albeit at a slightly slower pace.
Meanwhile, the services sector activities expanded at a faster pace, as reflected by the 61.9 index points for the sector in June, which rose from 57.0 in May.
In the PMI, an activity is divided between an expansion and a contraction at the index value of 50.0, which is considered the neutral level.
Under manufacturing, both new orders and production sub-indices, continued their growth in June, which also helped to expand the stock of purchases.
However, the employment sub-index contracted slightly as the sector was cautious in adding new hires, due to the uncertain global trade environment.
“Several respondents indicated a strategic move to hire only for essential positions and maintaining minimal raw material inventories, in response to the heightened uncertainties in the global trade environment,” the monthly survey said.
While the expectations for the next three months remain upbeat, the same trade-related uncertainties surrounding the tariffs from the US created some unease in the sector.
The services sector continued to be powered by the financial services driven by the lending activities made possible by the lower interest rates.
The services sector PMI and private sector credit data offered a preview of how the banking sector had expanded their loan book as they will open their books for the June quarter in the coming days and weeks.
Besides the financial services, other activities such as professional services, insurance, transportation, other personal activities and real estate activities also recorded positive developments in June.
Lower interest rates provide a tailwind for real estate activities to take off, as people borrow for housing and other building-related activities.
On the contrary to the manufacturing sector, the employment in the services sector expanded, due to recruitments across several companies.
The expectations for the services sector in the next three months continued to improve amid a favourable macroeconomic environment. However, some companies raised concerns over the implementation of the taxes on the supply of services by a non-resident person through an electronic platform. They further cited the uncertainties related to the US tariffs and developments in the Middle East as causes for concern.