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PH manufacturing posts sustained growth in Feb

  • Operating conditions of Philippine manufacturing sector continued to improve in February 2021 with the Philippine Purchasing Managers’ Index at 52.5, the same as in January
  • COVID-19 continues to pose a large threat with material shortages and transportation delays a result of pandemic restrictions
  • Reports from survey respondents suggested further pressure on supply chains. Transportation restrictions persisted causing port congestions. The extent to which lead times lengthened was among the sharpest in the series history.

The Philippine manufacturing sector continued to improve in February 2021 as output and new order volumes rose moderately, with firms mentioning the resumption of business at client firms following easing restrictions.

The Philippine Purchasing Managers’ Index remained at 52.5 in February, posting above the 50.0 neutral value that separates expansion from contraction. The latest reading signaled a solid uptick in operating conditions, with the rate of growth matching that seen in January, according to the latest survey of IHS Markit.

“Latest PMI data shows further progress across the Filipino manufacturing sector, with another solid overall expansion recorded during February. Output and new order growth persisted, whilst an acceleration in pre-production inventories suggests a commitment towards greater production in the months ahead. In addition, the rate of job shedding eased to the softest in 12 months,” IHS Markit economist Shreeya Patel said in a statement.

“That said, COVID-19 continues to pose a large threat with material shortages and transportation delays a result of pandemic restrictions. Exports were also hard-hit with overseas demand heavily subdued during February,” Patel added. Average cost burdens also rose at the quickest rate in over two years. Firms reportedly passed on part of the burden to clients by increasing selling charges.

Reports from survey respondents suggested further pressure on supply chains. Transportation restrictions persisted with port congestions often cited by panelists. The extent to which lead times lengthened was among the sharpest in the series history.

To cater for the overall rise in production, firms modestly increased their purchasing activity midway through the first quarter. A number of respondents attributed the uplift to greater demand.

While the latest data indicated sustained growth in production, employment declined for the twelfth month running. Respondents linked staff cuts to sufficient capacity and voluntary resignations.

Looking ahead, expectations regarding output in the year ahead remained positive overall. The degree of optimism improved from that seen in January, with firms often mentioning hopes of a return to normality. That said, sentiment posted far below the long-run series average, suggesting there are still some concerns regarding output over the next 12 months.

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