The local manufacturing sector recovered in January 2021 after its 10-month slump since the onset of the coronavirus disease 2019 (Covid-19) pandemic, the IHS Markit’s manufacturing purchasing managers’ index (PMI) reported Monday.
The Philippines’ manufacturing PMI in January hit 52.5, which is also higher than the pre-pandemic index of 52.3 in February 2020 and the highest score for the past 25 months.
IHS Markit economist Shreeya Patel said this indicated a rebound in operating conditions across Philippine-based manufacturers.
PMI reflects the condition of the local manufacturing sector measuring new orders, inventory levels, production supplier deliveries, and employment activities.
The neutral score is 50. Readings above 50 reflect the improvement of the sector and below the neutral score translate to deterioration.
“January data indicated a rebound in operating conditions across Filipino manufacturing sector after three successive months of decline. Production volumes rose solidly, while renewed growth in new orders indicated an overall improvement in demand conditions. An increase in purchasing activity and stocked inventories was also a positive sign that manufacturing companies expect demand to grow over the coming months,” said IHS Markit Economist Shreeya Patel.
The economist, however,cautioned the market as fragility remained evident looking at job shedding and mounting pressure on cost.
“That said, signs of fragility remained evident with staffing cuts and sharp cost pressures mounting. At the same time, virus-related restrictions contributed to substantially longer delivery times and subdued foreign demand. Business are hoping for a successful and swift vaccine roll-out plan, which is scheduled to begin during the first quarter. Until then, restrictions are likely to stay in place as policy makers seek to contain virus case numbers,” Patel added.
Meanwhile, Philippine-based manufacturers remained optimistic with the business environment for the next 12 months as they see a rise in production over the coming year.
“Business(es) are hoping for a successful and swift vaccine rollout plan, which is scheduled to begin during the first quarter. Until then, restrictions are likely to stay in place as policymakers seek to contain virus case numbers,” Patel added.