The Philippine manufacturing activity registered a modest expansion in March due to a marginal rise in production volumes, the latest monthly survey of IHS Markit revealed on Monday, April 5.
The IHS Markit Philippines Manufacturing Purchasing Managers’ Index (PMI) was registered at 52.2 in March, above the 50.0 threshold that indicates an expansion. The figure, however, is slightly lower compared with 52.5 in the previous month.
Shreeya Patel, IHS Markit economist said the local manufacturing sector ended the first quarter on a positive note with a modest expansion recorded in March due to “promising” output volumes despite a moderation in new order growth.
However, Patel noted that employment levels fell only marginally, but there is an “anecdotal evidence” suggesting that this was mostly voluntary, and not due to cost-cutting efforts.
March marked the thirteenth consecutive month of contraction in employment, but the latest fall was the softest during the period.
"A key area of concern, however, continues to be rising price pressures. Material shortages were often blamed for the higher costs incurred by firms. A sustained increase in client demand, however, allowed some firms to partially pass on rising expenses,” Patel said.
"Nevertheless, a strong first quarter places the sector in good stead for a return to industrial production growth in 2021, with our current forecast expecting a 7.1 percent expansion,” she added.
Meanwhile, IHS said that foreign client demand was subdued during the month as restrictions linked to the coronavirus disease 2019 (COVID-19) pandemic persisted in abroad markets.
Likewise, IHS said that supply chain pressures continued to build in March as lead times for inputs lengthened.
“Panellists continued to cite freight delays as driving the deterioration in vendor performance, with delivery times lengthening markedly. As such, firms sought to increase their inventory holdings to minimise future shortages due to delay,” IHS said.
However, IHS said the outlook for production remained in positive territory in March, with hopes of stronger economic conditions often linked to positivity.
“However, the degree of optimism posted below the long-run trend, suggesting that the global pandemic continues to weigh on expectations,” IHS said.