Philippine manufacturing up in February — IHS Markit

The Philippine manufacturing sector posted slight gains in February as new orders rose at the fastest pace in four months, results of the monthly survey conducted by IHS Markit showed.

The IHS Markit Philippines Manufacturing PMI edged up fractionally to 52.3 in February from 52.1 in January.

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.

"February survey data signaled a continuation of respectful growth across the Philippines' manufacturing sector," Joe Hayes, economist at IHS Markit, said in a separate commentary.

"Firms are enjoying resilient demand conditions, both domestically and abroad, with anecdotal evidence suggesting that pipeline work remains sufficient to support the positive production trend in the near term," he elaborated.

According to the results of the survey, new orders rose at the fastest rate since October 2019, indicating a "favorable" Underlying trend in demand for Filipino-manufactured goods.

Orders from foreign markets likewise increased at an accelerated pace in February, reflecting the strongest since July 2018.

Hayes flagged, however, that the coronavirus disease 2019 (COVID-19) could be a downside risk to growth.

"COVID-19 poses a downside risk, but this seems to have been isolated to the supply-side so far as exports grew at the fastest rate in over one-and-a-half years," he said.

"That said, panelists indicated that input deliveries out of mainland China had dented stockpiling and slowed the rate at which firms were completing outstanding orders," explained Hayes.

Over 2,800 have already been killed in mainland China, the epicenter of the disease, according to the country's National Health Commission.

"Given that stocks of purchases have risen strongly in recent months, firms should have appropriate buffers in place to withstand delivery disruptions, but if they continue, production volumes could be adversely impacted," Hayes elaborated.

The Philippine Statistics Authority (PSA) is scheduled to release official government data on the manufacturing sector for February on April 7. — RSJ, GMA News