RCBC chief economist Michael Ricafort
MANILA – An economist forecasts an improvement in the country’s purchasing managers index (PMI) in the coming months as movement restrictions are eased, which allow for more economic activities.
In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said PMI in May remained in contraction for the second consecutive month at 49.9.
A composite indicator of the manufacturing sector’s performance, an index of below 50 indicates contraction but those above 50 show expansion.
While the PMI remains below the 50-level threshold, Ricafort said the latest figure has improved after the quarantine classification in the National Capital Region (NCR) and four nearby areas namely Bulacan, Rizal, Laguna, and Cavite or the National Capital Region Plus, was eased to modified enhanced community quarantine (MECQ) from April 12 to May 15 from ECQ in the prior two weeks.
Movement restrictions in NCR Plus were further eased to GCQ with heightened restrictions from May 15 to June 15.
Ricafort said this development “effectively allowed some business/industries, including some manufacturing industries, to operate at a higher capacity.”
A drop in coronavirus disease 2019 cases as a result of the stricter quarantine levels in the past weeks bodes well for the economy but any upticks, as what has been registered recently, may still hurt the recovery in production, sales, net income, employment, and other business activities, he said.
Meanwhile, Ricafort noted the impact of the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), which was signed into law last March 26.
“(This may boost) net income of some manufacturers and give greater certainty on investment incentives, thereby could help spur/stimulate more manufacturing activities,” he said. (PNA)
