THE country’s manufacturing sector recorded its second consecutive growth month in October, largely on the back of eased restrictions and early recovery in demand.
International think tank IHS Markit, however, said the growth in the country’s manufacturing sector is still “marginal” as material shortages continued to hinder production during the month.
In a statement released on Tuesday, IHS Markit reported that the country’s Philippine Purchasing Managers Index (PMI) “rose fractionally” from 50.9 in September, to 51 in October. This is the highest PMI of the country in seven months.
A country’s PMI is meant to gauge the health of its manufacturing sector. It is calculated as a weighted average of five individual subcomponents. Readings above 50 show growth in the industry while readings below the 50 threshold signal a contraction in the manufacturing sector.
IHS Markit attributed the improved manufacturing performance of the country to signs of improvement in the demand environment.
The industry’s business confidence also improved to a three-month high in October as optimism was underpinned by hopes of greater international and domestic demand in the year ahead.
“Some restrictions continued to ease, and the demand environment showed tentative signs of improvement with new orders stabilizing after six months of decline,” IHS Markit economist Shreeya Patel said.
“However, the goods producing sector was yet again hit by delivery delays, material shortages and rising costs, which consequently inhibited output growth. Such pressures are likely to persist over the next few months, but a key concern comes from firms only partly able to pass on higher costs given the relatively weak demand environment,” the economist added.
The report also showed that goods producers continued to register a substantial deterioration in vendor performance.
According to the report, raw material shortages and poor transportation conditions reportedly led to extensive delays.
Filipinos are also not getting manufacturing jobs despite the early signs of recovery.
The report noted that firms continued to scale back on their work force numbers in October, with staffing levels falling for the 20th consecutive month. The rate of decline eased from that seen in September, however. Firms mentioned that while there were some cost-saving efforts, resignations were mostly voluntary.
“Firms hope that demand conditions in both domestic and international markets improve, with looser restrictions likely to support greater customer demand,” Patel said.
Images courtesy of Bernard Testa and Nonoy Lacza