The Philippine manufacturing sector edged up in February 2020 to 52.3 from 52.1 in January, supported by sustained growth in new orders from both domestic and overseas clients, according to the latest Purchasing Manager’s Index (PMI) survey of IHS Markit.
While the headline index reached its highest mark in just over one year it remained below its historical average, IHS Markit said.
A reading above 50 indicates an expansion of the manufacturing sector compared to the previous month; below 50 represents a contraction, while 50 indicates no change.
“February survey data signalled a continuation of respectful growth across the Philippines’ manufacturing sector. 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,” IHS Markit economist Joe Hayes said in a statement.
Shipment delays from China due to the coronavirus disease (COVID-19) outbreak, however, hindered stockpiling of finished goods and inputs.
Hayes noted that 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.”
“That said, panellists indicated that input deliveries out of mainland China had dented stockpiling and slowed the rate at which firms were completing outstanding orders,” Hayes said.
“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,” he added.
Supply chain disruption was evidenced by February survey data, which showed input delivery times lengthening to the greatest extent since December 2017. The COVID-19 outbreak had reportedly exacerbated problems with shipments caused by stock shortages and power outages.
As a result of these supply-side constraints, purchasing activity and input stocks both increased at slower rates during February.
Buying activity rose at softest pace in just over a year as some companies tried to keep a lid on costs.
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