Philippine manufacturing conditions deteriorated further in December — IHS Markit

The country's factory activity contracted further in December as quarantine restrictions impacted output volumes after nearing stabilization in the previous month, results of the monthly survey conducted by IHS Markit released on Monday showed.

The Philippines Purchasing Managers' Index (PMI) fell to 49.2 in December from 49.9 in November. 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 attributed the decline to the ongoing lockdown restrictions and poor weather during the period, with the rate of decline among the fastest in the data series history.

"December data was indicative of another contraction in operating conditions across the Filipino goods-producing sector. The pandemic, and ongoing restrictions have hit manufacturers hard, impacting both demand and output, which remained historically weak," said IHS Markit economist Shreeya Patel.

"The addition of material shortages and supply chain pressures placed pressure on operating conditions, whilst reduced output led to another month of sharp job cuts," she added.

Still, data from IHS Markit found that new orders were broadly unchanged in December but firms mentioned that ongoing restrictions weighed on domestic demand.

Meanwhile, overseas demand continued to expand, with exports rising for the fourth month given greater demand for Filipino products.

"That said, positives can be drawn from the latest survey findings; new orders neared stability and sentiment recovered to the levels seen before the start of the pandemic. At the same time, case numbers have moderated with expectations that restrictions will ease over the coming months," said Patel.

"Although the latest overall sector contraction was only marginal, domestic demand remains challenging which may stymie progress on the lengthy road to recovery," she added. — RSJ, GMA News