THE Philippine manufacturing sector’s lockdown-induced slump proved to be one of the worst in the Southeast Asian region, a recent report showed.
In the latest report on Southeast Asia’s Purchasing Managers Index (PMI), global think tank IHS Markit said the Philippine manufacturing sector was the second worst performing in April among the seven economies in the region, beating only Myanmar.
In particular, among the seven constituent nations, Vietnam saw the strongest PMI during the month at 54.7 followed closely by Indonesia’s 54.6. Malaysia’s manufacturing sector also grew strongly during the month with an index of 53.9 while Thailand recorded a mild growth of 50.7.
A country’s PMI is meant to gauge the health of its manufacturing sector. It is calculated as a weighted average of five individual sub-components. Readings below 50 show deterioration in the industry while readings above the 50 threshold signal a growth in the manufacturing sector.
Singapore dipped below the 50 threshold to hit a PMI of 49.5 during the month. The Philippines ranked the second lowest with a 49.0 PMI, while Myanmar had the worst performance due to political unrest at an index of 33.0.
“Both Singapore and the Philippines registered renewed contractions during April. For the former, the headline index signaled the first deterioration in conditions since last September, but one that was only fractional. In the Philippines, the contraction was the first in four months and, though marginal, was the fastest since October 2020,” IHS Markit said.
The deterioration in the Philippines manufacturing sector has bucked the trend for most economies in the region, as most manufacturing conditions show signs of recovery.
“Overall, the April PMI data point to a much improved performance for the Asean manufacturing sector, with clear signs that the recovery has began and the sector is beginning to make headway towards recouping any lost ground,” IHS Markit economist Lewis Cooper said.
Back home, local economists are also warning about further contractions in the manufacturing sector as movement restrictions are still in place to lower the elevated infection numbers.
“With the so-called NCR [National Capital Region] plus area still under partial lockdown in May while new daily infections remain elevated, we can expect another month of contraction for May, especially if the MECQ [Modified Enhanced Community Quarantine] status remains in place for the rest of the month,” ING Bank economist Nicholas Mapa said.
“Community quarantine measures are indeed costly and can almost single handedly knock the wind out of a manufacturing bounce back and in turn the economic recovery,” Mapa added.
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