THE expanded community quarantine implemented over the island of Luzon, as part of measures to address the spread of the coronavirus disease 2019 (COVID-19), has led to a sharp decline in manufacturing output, with HIS Markit’s headline index posting a record low last month.
The HIS Markit Philippines Manufacturing Purchasing Managers’ Index dropped to 39.7 in March, from the 52.3 recorded in February.
HIS Markit said in its report published yesterday the latest figure was the lowest in the series history, having dropped below the 50 neutral mark for the first time, and signaled a marked deterioration in operating conditions.
Factory shutdowns led to a sharp drop in production and new orders, the report said, with employment also declining at the quickest pace in the series history.
Supply chains meanwhile faltered amid border controls and local travel restrictions, HIS Markit said, while business confidence subsequently weakened, and firms registered large cuts to both purchases and inventories.
“The COVID-19 pandemic took its toll on goods production in the Philippines in March, as the enforced lockdown of Luzon island led many manufacturers to halt operations until restrictions are lifted. These shutdowns led to sharp declines across the sector, with output, new orders, employment and stocks of purchases all falling at record paces,” David Owen, economist at HIS Markit, said.
“Firms that remained open meanwhile saw a large delay in supplier delivery times, restricting their ability to operate at full capacity,” he added.
Owen pointed out that manufacturing sales were stymied in March, with clients having to massively reduce order books amid much weaker consumer demand.
Exports likewise declined as other countries enforced their own lockdowns while curtailing foreign orders.
The report said the outlook among manufacturers in the Philippines fell to its least optimistic in the series history in March.
“Unsurprisingly, businesses were much less positive regarding the 12-month future period. With no one knowing the full timeline of the pandemic, the extent of the economic impact remains largely unknown,” Owen said.
The report said the overall degree of confidence was only marginally positive, as concerns around the long-term impact of the coronavirus pandemic weighed on business forecasts.
“However, hopes of a swift return to normal operations and a rebound in new contracts helped to partly offset these downbeat predictions,” it added.
