The value of Philippine imports in May increased to its highest level in 21 months on rising purchases of iron, steel, oil, plastics as well as transport and industrial equipment – all indicating a pickup in domestic economic activity. "Import data are leading indicators, and these data suggest that the coming quarters will show good economic growth," said Jose Vistan, an economist at AB Capital Securities. "We've noticed that manufacturing is on the way up....we're also seeing a steady recovery in our trading partners."

The National Statistics Office Tuesday reported imports in May rose 31 percent to $4.75 billion, from $3.62 billion in May last year and was up 4.9 percent from April's $4.53 billion. The value of imports in May was the highest since September 2008, the onset of the global financial crisis.

Imports of electronics products, usually items that are reprocessed for export, increased 18 percent on year to $1.53 billion. Electronics is the country's largest export item.

Purchases of oil products in May doubled to $1.03 billion, from $505.2 million a year earlier, due to higher prices, while imports of cereals declined to $234.6 million, from $348.9 million last May, because of the lower cost of imported rice.

In the five months to May, imports increased 35 percent to $22.02 billion, from $16.27 billion in the year-earlier period. With exports in the January-May period reported earlier at $19.17 billion, the trade deficit in the first five months of 2010 widened to $2.85 billion, from $2.46 billion in the same period in 2009.

For May alone, the trade deficit was narrower at $513 million, from $529 million in the year-earlier period.

Singapore was the top source of imports for the Philippines in May, up 70 percent on year to $529.4 million. Japan was second-biggest import source, with Philippine purchases in May up 23 percent on year to $483.7 million.

Luz Lorenzo, economist at ATR-Kim Eng Securities, said import growth should start slowing in the second half due in part to higher comparative figures from last year and foreign governments' unwinding of stimulus packages. (Dow Jones)