The Philippine manufacturing sector’s operating conditions deteriorated in October after stabilizing the previous month, as the economic impact of the coronavirus disease 2019 (COVID-19) pandemic persists, a report released yesterday said.
According to the latest report of IHS Markit, the Philippines’ manufacturing purchasing managers’ index (PMI) fell from 50.1 in September to 48.5 in October, posting below the 50 neutral mark that separates expansion from contraction.
The latest reading dropped marginally after indicating a broad stabilization across the sector during September, to signal a contraction in operating conditions, the report said.
“Despite broadly stabilizing in September, the latest PMI data signaled that operating conditions across the Philippines manufacturing sector worsened in October as the economic fallout from the COVID-19 pandemic persisted,” it said.
“Firms saw a renewed fall in new orders amid ongoing business closures and weakening client demand. Job losses extended into the fourth quarter, whilst purchasing activity also dropped,” it added.
The report noted a drop in production volumes again in October, with the rate of decline quickening.
“Firms reporting a downturn overwhelmingly attributed it to weaker demand conditions.
That said, the rate of contraction was only marginal and much slower than the substantial decline seen in April,” it said.
Shreeya Patel, economist at IHS Markit, said weak client demand in domestic markets, a sharp contraction in employment and lower production weighed on the health of the sector, causing the overall PMI figure to drop.
“The reopening of businesses will support a pick-up in the economy, although, infection rates in the Philippines remain high compared to regional peers,” Patel said.
“Until virus cases are tamed domestically and globally, we are likely to see a protracted recovery in manufacturing production,” she added.
The report however showed that business confidence remained positive, and improved amid hopes of higher production in the year ahead.
“For now, firms remain optimistic that production will improve over the coming year, however, it remains to be seen whether the latest contraction was temporary,” Patel said.