The country’s manufacturing sector strongly rebounded to the growth territory in September after contracting in the previous month due to renewed Covid-19 restrictions.
In its latest report on Philippine Purchasing Managers Index (PMI), global think tank IHS Markit said the country’s PMI “rose sharply” from 46.4 in August to 50.9 in September. This is the highest PMI of the country in six months, or since March this year when it hit 5.2.
A country’s PMI gauges the health of its manufacturing sector. It is calculated as a weighted average of five individual sub-components. Readings above 50 show growth in the industry while readings below the 50 threshold signal a contraction in the manufacturing sector.
“After a tough trading period in August, manufacturers in the Philippines welcomed the relaxation of some virus-related restrictions. A number of factories and businesses resumed their operations,” IHS Markit economist Shreeya Patel said.
“On a positive note, the vaccination effort supported optimism, and with the government securing more doses, the Philippines looks committed to inoculating the population,” Patel added.
Broken down, however, the country’s manufacturing sector has a lot of room for improvement based on specific data points.
For example, IHS Markit said production volumes fell during September, marking a six-month sequence of decline as firms continued to indicate that the remaining Covid-19 restrictions hampered production.
Similarly, new orders declined further, but at a softer pace during September.
“Anecdotal evidence revealed a general reluctance to spend among clients amid ongoing restrictions. Meanwhile, after falling sharply in the previous survey period, there was broad stagnation in new export sales,” the report read.
Job shedding in the sector also persisted during the month, the report said, resulting largely from a combination of weak consumer demand, movement restriction and voluntary resignation left manufacturing firms in the Philippines with lower staffing levels.
“Global shortages have also weighed on the sector with prices increasing sharply. Unfortunately, firms will have to endure the disruption as supply pressures show no signs of slowing,” the IHS economist said.