MANILA – The IHS Markit reported on Thursday that the Philippines’ manufacturing purchasing managers’ index (PMI) for September breached the 50-mark, signaling stability in the sector.
The country’s PMI last month was at 50.1 after recording below 50-level since the start of lockdown measures in March.
This improved from the manufacturing score in August at 47.3.
The 50-mark means a stable manufacturing sector; below 50 reflects contraction, while above 50 signals increased production activity.
In the Asean, only the Philippines and Vietnam registered stable manufacturing conditions while countries like Malaysia, Myanmar, Thailand, and Singapore recorded contractions.
“The latest Philippines manufacturing data showed that operating conditions stabilized at the end of the third quarter. New business expanded for the first time since February, albeit tentatively, while production levels dropped only slightly,” IHS Markit economist Shreeya Patel commented.
IHS Markit said new orders increased for the first time since February. Businesses linked the higher sales to the reopening of the economy and firmer client demand.
Export sales likewise improved last month.
IHS Markit added that clients were buying in advance as they prepare for more stable market conditions in the coming months.
Meanwhile, the Department of Trade and Industry welcomed this development.
“Glad to hear that recovery for manufacturing has continued as we reopened more sectors of the economy. PMI is now back to over the benchmark 50. We have to continue to reopen the other sectors that remained partially closed to bring back more jobs and income opportunities that will re-stimulate demand and consumer confidence,” Trade Secretary Ramon Lopez told the Philippine News Agency in a text message.
Lopez added that it is crucial to keep the aggressive programs to enforce health protocols in workplaces for the country to continue the reopening of the economy.
On the other hand, IHS Markit reported that employment was still down in September, extending the trend of declining workforce numbers to seven months.
It attributed this to voluntary resignations, sufficient capacity levels, and cost-saving measures.
Higher production cost was also registered in September due to higher transportation costs, material shortages, and Covid-19-related surcharges from suppliers.
“Manufacturers had some difficulty passing on higher costs to clients due to tough market competition, however, with factory gate charges rising only marginally,” IHS Markit said.
Manufacturers’ outlook for the next 12 months was the highest since February.
“On a more hopeful note, stronger business sentiment and efforts to rebuild stocks suggest panelists are preparing for improvement in demand over the coming months, although optimism continues to rest on the development of the pandemic,” Patel said. (PNA)
