The manufacturing sector posted its strongest performance in over three years, amid relaxation of pandemic-related restrictions and signs of improvements in material availability.
The IHS Markit Philippines’ manufacturing purchasing managers’ index rose to 52.8 in February from 50 in January registering above the no-change threshold that separates expansion from contraction.
IHS Markit said the latest result signaled a resumption of growth in the Philippines manufacturing sector and indicated the strongest improvement in the health of the sector since December 2018.
Trade Secretary Ramon Lopez in a statement said last month’s performance is an indication of the sector’s solid growth in output, new orders, and exports due to easing of mobility curbs as the Omicron surge fades.
“Even before we shifted to Alert Level 2, we have allowed 100 percent operating capacity for all manufacturing, and all exports activities. Thus, with the recent de-escalation of Metro Manila and other provinces to Alert Level 1, we expect March PMI to remain above 50 on sustained manufacturing growth recovery, underpinned by economic reopening and greater mobility,” Lopez said.
IHS Markit said this also revealed a return to growth for the Filipino manufacturing sector with output, new orders and purchasing expanding solidly.
“Moreover, pre- and post-production inventories rose sharply while delivery times lengthened to a lesser extent,” the report said.
“Latest data reflected the relaxation of some virus-related restrictions and revealed tentative signs of improvements in material availability,” it added.
The report said as a result, firms were confident about their long-term prospects for output growth and reported hopes for a return to normality over the course of 2022.
However, IHS Markit noted inflationary pressures remained elevated, with input and output price inflation accelerating during the month.
“Inflationary pressures were historically elevated which forced firms to push through hikes in selling charges. At the same time, voluntary resignations continued, which has been seen since the pandemic hit the Philippines’ economy two years ago,” Shreeya Patel, economist at IHS Markit, said.
“Fortunately, production does not seem to have been impacted by staff shortages and firms are keeping backlogs at bay,” Patel added.
The report said looking ahead, hopes of a return to normality, greater demand and favorable presidential election outcomes underpinned positive sentiment in February.
The PMI considers new orders, output, employment, suppliers’ delivery time, and stocks. Readings above 50 signal growth and below that, a contraction. – With Irma Isip
