The improvement in the operating conditions of the Philippines’ manufacturing sector slightly eased in July, still amid the pandemic-related restrictions, a report released yesterday showed.
The IHS Markit Philippines manufacturing purchasing managers index fell from 50.8 in June to 50.4 in July, although still above the 50 threshold that separates expansion from contraction.
“Virus-related restrictions persisted in the Philippines, which contributed to weak domestic demand, and a general reluctance to spend in July. That said, the decline in new order volumes was broadly similar to that seen in June, and only marginal overall,” the IHS Markit report said.
“In contrast, international demand for Filipino manufactured goods rose for the third successive months, and at a modest pace amid improvements in global economic conditions,” it added.
Shreeya Patel, economist at IHS Markit, also said although the Philippines’ manufacturing sector recorded another improvement in operating conditions in July, latest data revealed domestic demand and production levels were still impacted by the pandemic.
“Meanwhile, case numbers have moderated somewhat from earlier on in the year, but are far from under control causing some restrictions to persist. Yet, encouragingly, vaccination efforts have provided a boost to the future outlook, in turn prompting input buying and rising stock volumes,” Patel said.
“Employment levels fell only marginally despite sustained declines in production. Moreover, anecdotal evidence suggested that this was mostly the non-replacement of voluntary leavers rather than redundancies,” Patel added.
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said in an emailed statement manufacturing activities could slow down by the upcoming two-week enhanced community quarantine (ECQ) in the National Capital Region (NCR), which also coincides with the ghost month.
“Manufacturing activities could possibly revert back to contraction mode (at slightly below 50) in August 2021 in view of the upcoming two-week pre-emptive ECQ in NCR, unless extended,” Ricafort said.
“Going forward, risk of lockdowns in NCR in an effort to help reduce new COVID-19 local cases that have been relatively higher on a daily basis recently, amid risks of new coronavirus variants that are more contagious, especially the Delta variant, could result to slower recovery in production, sales, net income/livelihood, jobs, and other business/economic activities, especially for hard-hit businesses, industries (and) sectors,” he added.
