Manufacturing sustained year-on-year growth in March, before the most stringent lockdown measures were again imposed in Metro Manila and four neighboring provinces that host economic zones and factories to contain the surge in COVID-19 infections.
London-based global information provider IHS Markit Ltd. on Monday said the Philippines’ purchasing managers’ index (PMI) slightly eased to 52.2 last month from the two-year high of 52.5 posted during the first two months of this year.
Since the PMI remained above the neutral 50, it “was indicative of a modest improvement in the health of the manufacturing sector with growth registered throughout the first quarter of 2021,” IHS Markit said.
“Promisingly, output volumes rose despite a moderation in new order growth,” IHS Markit economist Shreeya Patel said, as overseas demand was reportedly “falling substantially.”
“Meanwhile, employment levels fell only marginally with anecdotal evidence suggesting that this was mostly voluntary, and not due to cost-cutting efforts at firms,” Patel added.
The 13th straight month of shrinking employment in the country’s factories was recorded in March, even as IHS Markit attributed last month’s “softest” workforce reduction mostly to resignations.
But just as consumers have been burdened by high inflation during recent months, manufacturers were also being squeezed by rising prices of production inputs, Patel said.
“Material shortages were often blamed for the higher costs incurred by firms. A sustained increase in client demand, however, allowed some firms to partially pass on rising expenses,” according to Patel.
IHS Markit said “the rate of output price inflation was [the] sharpest since November 2018.”
Despite these challenges, Patel said the year-on-year manufacturing growth posted during all three months of the first quarter “places the sector in good stead for a return to industrial production growth in 2021, with our current forecast expecting a 7.1-percent expansion.”
However, IHS Markit’s report did not indicate yet the potential impact of the ongoing two-week revert to enhanced community quarantine in so-called National Capital Region (NCR) Plus bubble, which includes the provinces of Bulacan, Cavite, Laguna and Rizal—in all accounting for half of the Philippines’ gross domestic product.