PH manufacturing activity hits new low in April

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The downturn in the Philippines’ manufacturing sector deepened in April 2020, hitting a record low following the lockdown of a large part of the economy to ease the spread of the coronavirus disease (COVID-19).

The Philippine Purchasing Managers’ Index (PMI) fell further to 31.6 in April 2020, from 39.7 in March 2020, indicating another steep decline in operating conditions across the manufacturing sector, according to the latest PMI survey of IHS Markit.

The headline reading marked a new record low, with a deterioration recorded in all five sub-components of the index. The Philippine PMI last March 2020 fell well below the 50.0 no-change mark to 39.7, signaling a marked deterioration in operating conditions.

READ: PH manufacturing activity sees historic low in March

“The Philippines Manufacturing PMI joined a chorus of data demonstrating the widespread and severe impact of lockdown measures on the global economy in April,” IHS Markit economist David Owen said in a statement.

Lockdown measures were extended throughout April, leaving most firms unable to operate at normal capacity. Production levels thus collapsed, with the rate of contraction by far the quickest since the PMI series began in January 2016, IHS Markit noted.

It added that the lockdown also had a large impact on manufacturing demand at the start of the second quarter, as restricted activity led clients to cancel orders and consumers to limit spending. In addition, exports fell drastically due to company closures and global measures to limit the spread of COVID-19. As a result, total new orders fell at the fastest pace seen in the series history.

Manufacturers made large efforts to reduce purchasing in April as demand collapsed, with input buying sliding at a marked pace from March. Pre-production inventories fell substantially, while stocks of finished goods also decreased at a sharp rate.

Falling activity led to a steep drop in workforce numbers in April, although the rate of job shedding was slower than seen in March.

Owen noted that manufacturers also face difficulties with both overseas supply and demand, with exports falling sharply and supply chains struggling amid the pandemic.

Several firms noted that stocks were slow to arrive in April as a result of lockdown measures, as supply chains were hampered by restrictions. Lead times increased for the ninth month running, with delays lengthening to the greatest extent in the series so far.

“A removal of lockdown measures in the Philippines may temper these issues, but they will likely remain in some form for the duration of this global crisis,” Owen said.

Image by enriquelopezgarre from Pixabay