PH manufacturing PMI rises to 15-month high
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Mon, 02 Mar 2020 16:20:36 +0000
The Philippine manufacturing sector continued to expand in February, with the Purchasing Managers Index (PMI) hitting a 15-month high, the latest IHS Markit survey showed.
Results released on Monday revealed the indicator rose to 52.3 from 52.1 in the previous month. The figure is the highest since the 54.2 recorded in November 2018.
The PMI takes into account new orders, output, employment, suppliers’ delivery time, and stocks. Readings above 50 signal an expansion; below that, a contraction.
“By increasing further above the neutral 50-mark, this was indicative of a faster rate of improvement in manufacturing sector operating conditions,” IHS Markit said in a report.
It added that sustained growth in new orders from both domestic and overseas clients supported the modest month-on-month rise in output.
Employment and purchasing activity were also expanded as firms anticipated further gains in demand. Meanwhile, output volumes increased during February.
“That said, shipment delays from China due to the Covid-19 (coronavirus disease 2019) outbreak hindered stockpiling of finished goods and inputs, and also led to a slower decline in outstanding work,” IHS Markit, however, stressed.
Overall, the rate of expansion was modest and little-changed from January’s three-month high, it said.
Nevertheless, IHS Markit underscored that solid demand conditions were supportive of higher production amid some reports that the virus outbreak and the recent Taal Volcano eruption limited growth.
New orders rose as anecdotal evidence highlighted a favorable underlying trend in demand for Filipino-manufactured goods, it said.
IHS Markit added the workloads from foreign markets also increased at an accelerated pace during February. The pickup in exports was the strongest since July 2018 amid client wins and the launch of new products.
Commenting on the latest survey results, IHS Markit economist Joe Hayes acknowledged that the latest data “signalled a continuation of respectful growth across the Philippines’ manufacturing sector.”
“Firms are enjoying resilient demand conditions, both domestically and abroad, with anecdotal evidence suggesting that pipeline work remains sufficient to support the positive production trend in the near term,” he said.
Hayes added Covid-19 poses a downside risk, but this seems to have been isolated to the supply-side so far as exports grew at the fastest rate in over one-and-a-half years.
“Given that stocks of purchases have risen strongly in recent months, firms should have appropriate buffers in place to withstand delivery disruptions, but if they continue, production volumes could be adversely impacted,” he continued.
Looking ahead, IHS Markit said the survey’s panelists are seeing further output growth over the coming 12 months as ample pipeline work, aggressive sales targets, and expansion plans underpinned their confident outlook.