Factory output expands anew in February
The country’s manufacturing activity sustained its expansion pace for two consecutive months in February as factories resume business amid easing restrictions and anticipation of further improvements in demand.
Based on the latest monthly survey of IHS Markit, the Philippines Purchasing Managers' Index (PMI) remained at 52.4 last month, posting above the 50.0 neutral value that separates expansion from contraction.
IHS Markit said the latest reading signalled a solid uptick in operating conditions.
Shreeya Patel, IHS Markit economist said the latest PMI data showed further progress across the Filipino manufacturing sector, with another solid overall expansion recorded last month.
“Output and new order growth persisted, whilst an acceleration in pre-production inventories suggests a commitment towards greater production in the months ahead. In addition, the rate of job shedding eased to the softest in 12 months,” Patel said.
However, the economist also said that COVID-19 continues to pose a large threat with material shortages and transportation delays a result of pandemic restrictions.
Exports were also hard-hit with overseas demand heavily subdued during February, Patel said.
“For now, controlling the COVID-19 pandemic remains at the heart of the Philippines’ agenda, and whilst vaccines have been secured, delivery delays have severely hindered efforts to vaccinate the nation,” Patel said.
“Policy-makers will however welcome the sustained improvement in manufacturing operating conditions during February,” she added.
Output volumes increased modestly in February, despite softening from that in January.
New orders also rose, with respondents mentioning new customers and the resumption of client business following an ease in pandemic restrictions.
Meanwhile, demand from overseas markets dwindled, with export orders falling solidly. According to panellists, the COVID-19 pandemic continued to hamper demand conditions in international markets.
On the price front, input price inflation rose at the sharpest rate since October 2018 with raw material shortages underpinning the increase. Firms looked to pass on higher costs by raising their selling charges.
Looking ahead, expectations regarding output in the year ahead remained positive overall.
“The degree of optimism improved from that seen in January, with firms often mentioning hopes of a return to normality. That said, sentiment posted far below the long-run series average, suggesting there are still some concerns regarding output over the next 12 months,” IHS Markit said.