MANILA – IHS Markit sees protracted recovery for the Philippine manufacturing sector as the purchasing managers' index (PMI) fell in October.
The country's manufacturing PMI last month dropped to 48.1, below the neutral score of 50.
In September, local manufacturing activity scored 50.1 after indices fell for six consecutive months since March.
Indices above 50 show improvement in manufacturing activities, while below 50 indicate deterioration.
"Despite broadly stabilizing in September, latest PMI data indicated that the Philippine manufacturing sector fell into contraction territory in October. Weak client demand in domestic markets, a sharp contraction in employment, and lower production weighed on the health of the sector, causing the overall PMI figure to drop," IHS Markit economist Shreeya Patel said Tuesday.
Patel added that as the coronavirus disease 2019 (Covid-19) cases persist, the global health crisis will continue to take its toll on the economy.
"The reopening of business will continue to support a pick up in the economy, although infection rates in the Philippines remain high compared to regional peers. Until virus cases are tamed domestically and globally, we are likely to see a protracted recovery in manufacturing production," Patel added.
Meanwhile, business confidence for the next 12 months was positive in October.
"For now, firms remain to be optimistic that production will improve over the coming year, however, it remains to be seen whether the latest contraction was temporary," Patel said. (PNA)
