Philippines: Business conditions improve only marginally at the start of the second quarter
The manufacturing Purchasing Managers’ Index (PMI), produced by Nikkei and IHS Markit, ticked down to 50.9 in April from 51.5 points in March. Consequently, the index now lies just a notch above the critical 50-point threshold that separates expansion from contraction in the manufacturing sector.
The subdued improvement in manufacturing conditions in April was the result of the second-weakest rise in output in the survey’s history and new orders increasing at the slowest rate in nine months. Notably, some firms slowed or even cut production due to raw material shortages, while languishing external demand dragged on new foreign business inflows. Moreover, employment levels dropped for the second consecutive month, however this was again due more to resignations. Firms responded to softer demand by reducing pre-production stocks, although manufacturers’ purchasing activity continued to increase. On a brighter note, supply-side constraints eased in April, with less delays from port congestion in Manila shortening supplier delivery times.
In terms of prices, input cost inflation rose more modestly in April, while output price inflation fell to a 22-month low.
David Owen, economist at IHS Markit, commented:
“April PMI revealed an even more subdued picture for the Philippines. With first quarter results already reflecting weaker manufacturing growth than at the end of last year, the latest data did little to raise hopes for the second quarter. […] With the national election during May, production growth may be stifled again in the next survey. As such, it is looking like the second quarter may prove to be a challenging one for the manufacturing sector.”