Philippine manufacturing posts new record low in April — IHS Markit

The Philippine manufacturing sector continued to drop in April to mark new record lows in the IHS Markit monthly survey, due to factory shutdowns brought about by the spread of the coronavirus disease 2019 (COVID-19).

The IHS Markit Philippines Purchasing Managers' Index (PMI) fell to 31.6 in April, down from the 29.7 in March and the 50.9 in April 2019.

The PMI is a composite indicator of the manufacturing sector’s performance, with 50.0 as the threshold. A reading above 50 indicates growth and below 50 is a contraction.

"The Philippines Manufacturing PMI joined a chorus of data demonstrating the widespread and severe impact of lockdown measures on the global economy in April," David Owen, economist at IHS Markit, said in a commentary.

"The headline PMI posted 31.6, another record low after March's dismal figure. Output declined at a rapid pace, signalling that industrial production data is likely to be bleak during the lockdown period," he elaborated.

Metro Manila has been on lockdown since March 17, with the enhanced community quarantine in the area extended twice until May 15.

IHS Markit noted that given the lockdown, production levels collapsed with the rate of contraction the quickest since the series began in January 2016. This also impacted demand at the start of the second quarter.

"A key factor in this crisis will be employment. April data suggested the decline in job numbers softened from March, though it was still marked overall. However, a quick return to activity may bring about a strong recovery in jobs," said Owen.

According to the Department of Labor and Employment, over 2 million workers have been displaced by the quarantine measures put in place to curb the spread of COVID-19.

"Manufacturers also face difficulties with both overseas supply and demand, with exports falling sharply and supply chains struggling amid the pandemic," Owen said.

"A removal of lockdown measures in the Philippines may temper these issues, but they will likely remain in some form for the duration of this global crisis," he elaborated. — RSJ, GMA News