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HomeEconomyPH manufacturing rebounds in May but supply delays persist

PH manufacturing rebounds in May but supply delays persist

  • Filipino manufacturers signaled a rebound in operating conditions in June 2021, albeit marginal, as the country continued to face modified and enhanced community quarantine measures following a rise in COVID-19 cases
  • The Philippine Purchasing Managers’ Index rose from 49.9 in May to 50.8 in June, registering above the 50.0 no-change threshold that separates expansion from contraction
  • Declines across output, new orders and employment eased while exports rose sharply during the month
  • Goods producers in the Philippines remained optimistic about prospects for higher production levels in the next 12 months

Filipino manufacturers signaled a marginal rebound in operating conditions in June 2021 even as the country continued to face modified and enhanced community quarantine (MECQ) measures following a rise in COVID-19 cases.

The Philippine Purchasing Managers’ Index rose from 49.9 in May to 50.8 in June, registering above the 50.0 no-change threshold that separates expansion from contraction. The latest expansion followed two consecutive months of decline, and signaled a rebound in operating conditions in the Philippines, according to the latest survey of London-based IHS Markit.

“Declines across output, new orders and employment eased while exports rose sharply during the month,” IHS Markit economist Shreeya Patel said in a statement.

She added, “it was not all good news in June, however, with MECQ measures persisting and, in some instances, delaying the supply of inputs.”

Production levels declined for the third month in a row in June, which survey panelists often linked to COVID-19 and subdued domestic demand.

Similarly, new orders fell though the rate of decline was only slight and the softest in the current three-month sequence of decline. According to panel members, MECQ measures enforced in key regions led to weak domestic demand. In contrast, international demand for Filipino manufactured goods rose for the second successive month, and with a rate of growth that was stronger than the historical average.

Higher transportation and raw material costs resulted in rising input prices in June. IHS Markit said latest data indicated a robust overall increase in average cost burdens, although the rate of inflation eased for the second month running.

To protect profit margins, manufacturers raised their selling prices further by partly passing on higher expenses. Output price inflation quickened to an over two-and-a-half year high in June.

Patel said with the vaccination program still in its early stages, “controlling the spread of the pandemic remains principal to preventing another series of tightening restrictions.”

She added: “Firms in the meantime will hope issues surrounding the supply of materials are resolved.”

Goods producers in the Philippines remained optimistic about their overall prospects for higher production levels in the next 12 months.

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