PH

Markit said.

The PMI takes into account new orders, output, employment, suppliers’ delivery time and stocks. Readings above 50 signal an expansion; below that, a contraction.

Factory output expanded for the first time in four months in June as the government’s relaxation of lockdown measures — which the government imposed in mid-March to contain the spread of the coronavirus disease 2019 (Covid-19) pandemic in the country — allowed

companies to increase production.

Demand also grew during the month, with new orders still falling, but at a pace slower than May’s. New orders from overseas also fell to the softest rate in four months.

Despite the improvement in prodcuction, IHS Markit reported that the country’s employment numbers continued to decline, and at the fastest rate since March.

“While some firms increased workforces in order to improve capacity, many respondents chose to keep employment at minimal levels and did not replace workers leaving for other roles. Nevertheless, firms were able to lower backlogs, as demand remained weak,” it said.

Purchasing activity also dropped for the fourth straight month, while input prices rose to a 16-month high as firms saw a quicker increase in supplier prices amid transport difficulties and higher freight charges.

Businesses partly passed the higher costs to consumers by slightly increasing selling prices.

The government’s decision to put Metro Manila and other areas in the country under “general community quarantine helped the manufacturing sector make large strides toward stability in June,” IHS Markit economist David Owen said.

“[More] importantly, production was raised for the first time since before the lockdown, which, while marginal overall, marked a significant milestone in the reopening of the sector,” he added.

“The sharper decline in workforces suggests that manufacturers may need to see a strong rebound in goods demand before job levels can expand.

“Signs from new orders and export orders data are encouraging, but the recovery may still be gradual as the pandemic continues and even accelerates in some regions.”

Manufacturing outlook for the year ahead improved to its highest since February, according to IHS Markit. Companies are more optimistic due to the relaxed lockdowns, and many of them hope this would help them regain customers and resume plans to develop new products.