THE Philippines’ manufacturing sector posted a softer decline in operating conditions in May, amid the easing of coronavirus disease 2019 (COVID-19)-related lockdown measures in some regions, according to the latest report of IHS Markit.
The report released yesterday said the Philippines’ Manufacturing Purchasing Managers’ Index rose to 40.1 in May, from a record low of 31.6 in April.
Despite the improvement, the paper said the reading still pointed to a sharp deterioration in operating conditions across the manufacturing sector, the third in as many months.
“Production levels were subdued due to lockdown measures remaining broadly in place across the Philippines. However, reports of the partial easing of restrictions in rural areas led to a less severe decline than that seen in April, with some businesses able to restart operations,” it said.
“That said, ongoing social distancing led to capacity being much lower than normal, while weak new order volumes often discouraged firms from raising output,” it added.
David Owen, economist at IHS Markit, pointed out the headline index picked up and was much higher than in April when the lockdown had its greatest impact on production.
“Yet conditions have still not recovered, with restrictions in the capital and other cities broadly the same since April, in part leading to another sharp fall in new order volumes,” Owen said.
“Only the lifting of measures in rural areas helped to slow the decline. Employment continued to drop amid excess capacity, further hampering demand conditions,” he added.
The report said employment was reduced for the fourth time in five months during May. “Businesses largely related the fall to weaker sales and restrictions to output, with many panelists operating with minimal employee numbers. The fall in new orders meant that capacity to complete backlogs remained sufficient, although outstanding work dropped only marginally and at the softest pace in over four years,” it said.
“Looking forward, the degree of sentiment regarding output in a year’s time continued to improve from March’s nadir, as companies were encouraged by a partial easing of lockdown measures and COVID-19 cases being kept under control. Firms hoped that the introduction of new products would also drive activity higher,” it added.