Survey: Phl manufacturing posts slight growth in June
The Philippine Purchasing Managers' Index (PMI) posted a slight improvement in June, but new orders remained in decline, results of the IHS Markit monthly survey revealed.
The IHS Markit showed that Philippines' PMI rose to 49.7 in June from 40.1 in May, but still lower than the 51.3 recorded in June 2019.
The PMI is a composite indicator of the manufacturing sector's performance, with 50.0 as the threshold. A reading above 50 indicates growth and below 50 is a contraction.
The latest reading is the highest since February's 52.3, a month before the enhanced community quarantine (ECQ) was put in place in March which registered a record-low PMI of 39.7.
"The change in government COVID-19 rules to the General Community Quarantine helped the manufacturing sector make large strides towards stability in June," IHS Markit economist David Owen said in an explanatory note.
"Most 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 elaborated.
Metro Manila and other "high-risk" areas were placed under an enhanced community quarantine (ECQ) from March 17 to May 15, followed by a modified enhanced community quarantine (MECQ) until May 31.
A general community quarantine (GCQ) was put in place from June 1 to 15, and was extended to June 30, and, again extended until July 15.
According to IHS Markit, firms commented that new work remained weak due to the coronavirus pandemic and ongoing restrictions.
"However, many firms did remain closed or operated at much lower capacity, suggesting that parts of the sector have some way to go to restore production to pre-pandemic levels," said Owen.
There was also a drop in demand, but the rate of the decline was softer than in May, pushing firms to continue holding back in hiring.
"The sharper decline work forces suggest that manufacturers may need to see a strong rebound in goods demand before job levels can expand," Owen said.
"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," he elaborated.
The Philippine Statistics Authority (PSA) reported an unemployment rate of 17.7% in April, reflecting an increase of 5 million jobless Filipinos to 7.3 million.
The PSA is scheduled to report official government data on June manufacturing on August 5, 2020.