Reimposition of MECQ dragged manufacturing to three-month low in August -IHS Markit

The Philippine manufacturing sector posted a three-month low in August as quarantine measures were tightened anew, results of the monthly survey conducted by IHS Markit showed.

The IHS Markit Philippines Purchasing Managers' Index (PMI) fell for the second straight month to 47.3 in August from 48.4, its weakest in three months.

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

IHS Markit economic David Owen attributed the slowdown to the reimposition of the modified enhanced community quarantine (MECQ) from a more relaxed general community quarantine (GCQ).

"The recent steep increase in new COVID-19 cases led the government to impose stricter quarantine measures in Manila and the surrounding provinces in August," said Owen.

"The new measures meant that certain groups were unable to travel and some businesses were forced to reduce operating capacity," he added.

Metro Manila, Bulacan, and the Calabarzon areas were again placed under the MECQ from August 3 to 15

Frontliners earlier called on the government to consider reimposing stricter quarantine measures to give health workers a time to recuperate from exhaustion due to the non-stop admission of COVID-19 patients.

"The downturn was linked to a sharp drop in new orders and a subsequenly steep reduction in output, as client demand fell notably due to the new restrictions," said Owen.

According to IHS Markit, output levels contracted for the second consecutive month in August, while new orders remained in the negative terriroty since the escalation of the pandemic in March.

"Job losses remained apparent as firms continued to trim capacity at a steep rate to adapt to the new economic environment. Stocks were also reduced, extending the run of depletion to six months," Owen said.

"Businesses remain less confident than normal of an increase in output over the coming year, reflecting the uncertainty of the path of the pandemic and lockdown measures," he added.

Metro Manila has since been placed under the GCQ which has been extended to last until September 30.

The Philippine Statistics Authority (PSA) is scheduled to release official figures of the Monthly Integrated Survey of Selected Industries (MISSI) for the month of August on October 6, 2020.—AOL, GMA News