Filipino manufacturers kept up a solid rate of expansion in February, extending the current sequence of improvement in operating conditions to two months, survey results released by IHS Markit showed on Monday.
IHS Markit said the Philippine manufacturing Purchasing Managers Index (PMI) remained at a 25-month high of 52.5, signalling a “solid uptick in operating conditions, with the rate of growth matching that seen in January.”
The PMI takes into account new orders, output, employment, suppliers’ delivery time and stocks. Readings above 50 signal an expansion; below that, a contraction.
“Latest PMI data shows further progress across the Filipino manufacturing sector, with another solid overall expansion recorded during February. 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,” said IHS Markit Economist Shreeya Patel.
Survey results showed that output volumes increased due to higher order inflows and greater demand.
The increase in new orders meanwhile was attributed to new customers and the resumption of client business following the easing of restrictions.
Demand from overseas markets, however, waned as the pandemic continues to affect international markets.
According to IHS Markit, manufacturing firms modestly increased their purchasing activity on the back of greater demand.
IHS Markit, meanwhile, said manufacturing firms reported further pressure on supply chains.
“Transportation restrictions persisted with port congestion often mentioned by panellists. The extent to which lead times lengthened was among the sharpest in the series history,” it added.
Input price inflation also rose at the sharpest rate since October 2018 due to the shortage of raw materials. Firms said the higher costs will result in the increase of selling charges.
Despite these, firms’ expectations on output continued to be positive as firms hope for a return to normality.
“For now, controlling the Covid-19 (coronavirus disease 2019) 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. Policy makers will, however, welcome the sustained improvement in manufacturing operating conditions during February,” said Patel.