PHL’S PMI still beat region’s average in May

DESPITE the Philippine manufacturing sector’s contraction in May due to disrupted operations, its performance is still better than the Southeast Asian average.

In a report released Tuesday morning, IHS Markit announced that the average Purchasing Managers’ Index (PMI) for May rose to 35.5, up from the previous month’s 30.7. This puts the Philippines’ PMI of 40.1 above average.

The PMI is a composite index aimed to gauge the health of the country’s manufacturing sector. It is calculated as a weighted average of five individual subcomponents. Readings below 50 show deterioration in the industry, while readings above the 50 threshold signal a growth in the manufacturing sector.

Due to the coronavirus disease (Covid-19), all countries registered a deterioration of their manufacturing sector.

In terms of ranking, the Philippines’ PMI ranked fourth of the seven Southeast Asian countries monitored by IHS Markit.

Singapore was still hardest hit, and the only country which saw the downturn intensify in May. IHS Markit reported that Singapore’s 26.4 PMI was indicative of a substantial deterioration in the health of the sector and the lowest in the series’ near eight-year history. Indonesia’s PMI ranked sixth at 28.6. Myanmar ranked fifth, just below the Philippines’ ranking, with a PMI of 38.9.

The Philippines’ PMI of 40.1 was an improvement compared to the April figure of 31.6. The global think tank, however, said that despite the improvement, the reading still pointed to a sharp deterioration in operating conditions across the country’s manufacturing sector.

“Conditions have still not recovered, with restrictions in the capital and other cities broadly the same since April, in part leading to another sharp fall in new order volumes.… Employment continued to drop amid excess capacity, further hampering demand conditions. Price pressures began to inflate in May after marked decreases during March and April. Raw material prices rose slightly as reductions in global supply started to outweigh weaker demand and led to difficulties in acquiring inputs. Output prices also increased, but firms tried to keep charge inflation low, hoping this would encourage an improvement in sales once demand conditions have returned to normal,” IHS Markit economist David Owen said.

Thailand did better than the Philippines in May, with a PMI of 41.6. Vietnam’s manufacturing sector ranked second with a PMI of 42.7, while Malaysia was the least affected country in May with a PMI of 45.6.

“Notably, each of the seven monitored countries remained mired in a downturn for the third month running during May, which lays bare the enormous impact the pandemic is having on the sector. Although data appear to suggest that the downturn bottomed out in April, Asean manufacturers are still a long way from a recovery,” IHS Markit economist Lewis Cooper said.

BERNARD TESTA AROUND 30 jeepney drivers from Caloocan City out of work since the lockdowns in March hold a rally to ask City Hall to let them ply their routes. They say they have yet to receive cash aid from the government, and that they should also be allowed to return as bus and taxi drivers were already earning a living. Transport advocates have asked the government to implement service contracting to protect transport workers and ensure adequate public transportation in areas under the general community quarantine.