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Manufacturing rebounded in September for the first time since the Philippines imposed lockdown protocols to contain COVID-19 in March, the latest Purchasing Managers Index (PMI) released Thursday showed.
In a report, London-based global information provider IHS Markit Ltd. said the Philippines PMI rose to 50.1 last month from 47.3 in August, ending six consecutive months of contraction.
A PMI above the neutral mark of 50 meant there was a year-on-year increase in manufacturing activities, last seen in February at 52.3, before the COVID-19 quarantine began.
“September data indicated that the operating conditions facing Philippine manufacturing companies were generally stable. New orders increased for the first time since February, driven by improving customer demand as more parts of the economy reopened following the easing of COVID-19 restrictions, “said IHS Markit.
Total output from the country’s factories was even lower year-on-year last month, but IHS Markit said the drop was only “marginal” and was the slowest pace in three months.
“According to the companies, ongoing restrictions related to the COVID-19 pandemic continued to limit the sector’s performance, with some companies forced to downsize,” said IHS Markit economist Shreeya Patel.
As such, IHS Markit said that “employment continued to fall sharply, which manufacturers often linked to the non-replacement of those who quit voluntarily and with sufficient capacity.”
“On a more hopeful note, stronger business sentiment and efforts to rebuild stocks suggest that panelists are bracing for an improvement in demand in the coming months, although optimism continues to rest on the development of the pandemic,” Patel said.
Business confidence among manufacturers surveyed by IHS Markit in September was the highest since February, even as production costs remained high.
“Higher transportation costs, material shortages and reports of supplier surcharges related to COVID-19 resulted in a solid increase in cost burden during September. However, manufacturers had some difficulty passing the higher costs on to customers due to stiff market competition as factory entry charges increased only marginally, ”said IHS Markit.
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