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COMMERCE SECRETARY Ramón M. López remains confident of the economic recovery despite weakness in Philippine manufacturing in October, calling the drop a “pause” in momentum.
The manufacturing purchasing managers index (PMI) fell to 48.5 last month from 50.1 in September, the seventh time the index fell below the 50-point level that marks the line between expansion and contraction.
IHS Markit said operating conditions in the sector worsened as new orders dwindled, deals closed and consumer demand weakened as the pandemic persisted.
Lopez, in a statement Wednesday, said that staffing at companies is still shrinking despite fewer deals closing. Traffic restrictions and large concentrations remain in effect.
“But we have started to reopen the economy and we will continue to do so gradually and safely,” he said.
He said the government is working to ensure strict implementation of health standards in workplaces to improve consumer confidence. The government has also introduced tax breaks to encourage the production of goods needed to address the health crisis, such as medical supplies and personal protective equipment.
“We are confident that the economy is generally on the road to recovery, although overall demand will remain subdued compared to pre-pandemic levels as some jobs are just beginning to recover,” Lopez said.
The PMI presents the weighted average of five indices: new orders, production, employment, supplier lead times, and inventory purchases. As a measure of the orders expected by purchasing managers, it is considered a leading indicator of manufacturing activity, as the raw materials requested are transformed into processed products.
IHS Markit said Philippine production volumes and new orders fell due to weak demand. Manufacturing companies also continue to cut staff.
Supplier shortages due to uncertain demand depleted stocks of raw materials and finished products, while delivery times were delayed due to transportation restrictions.
Manufacturers, IHS Markit said, expect production to increase next year, although they anticipate the pandemic will have a long-term impact on production.
Among selected members of the Association of Southeast Asian Nations, the Philippines’ index was below those of Thailand and Vietnam, and was tied with Malaysia. – Jenina P. Ibáñez
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