By Bianca Cuaresma & Cai U. Ordinario
The Philippines reported a manufacturing sector pushing still higher in March following months of slack, a development experts rated as the second fastest in the region.
On Monday the influential media organization Nikkei and the think tank IHS Markit said the country’s purchasing managers’ index (PMI) accelerated to 53.8 from the 53.6 in February.
The PMI measures the health of the manufacturing sector and viewed as a composite whose components include new orders weighing the most at 30 percent; output, 25 percent; employment, 20 percent; suppliers’ delivery times, 15 percent; and stocks of purchases for the other 10 percent.
Readings above 50 signal an improvement in business conditions while readings below 50 show deterioration.
The PMI at 53.8 is above the Asean average of 50.9 in during the month, the second highest in the region next only to Vietnam with PMI of 54.6 for the period.
“Growth in both output and new orders remained key drivers, with rising client demand prompting firms to step up the pace of hiring. Firms also increased input buying but
greater production usage led to only a modest build in inventories. Increased demand did
not strain supplier capacity,” Nikkei reported.
“On the contrary, vendor performance improved, albeit at a slower rate. Meanwhile, further cost increases led to firms raising selling prices by the greatest extent in the series history,” it added.
IHS Markit economist Bernard Aw said the March survey pointed to a further strengthening in the continued expansion of the manufacturing sector, which bodes well for growth prospects in the first quarter.
“Growth is being driven mostly by robust domestic demand, stemming from buoyant consumers and public infrastructure spending, in particular,” Aw said.
“Export growth remained modest, helped by a stronger US dollar. However, the weaker exchange rate means that prices for imported inputs continued to be more expensive than before. Firms were able to pass on much of the higher costs to customers as demand for Filipino goods remains strong,” he added.
Aw also expressed confidence the manufacturing sector will grow stronger in the months ahead, given ample government support.
“If recent sectoral improvements continue, especially with increased government spending and resilient private consumption underpinning the economy, we could see stronger growth in the months ahead,” Aw said.
In a separate development, the National Economic and Development Authority (Neda) ruled out growth averaging as high as 8 percent under the Philippine Development Plan 2017-2022, unless increased attention and better management is lavished on the country’s natural resources.
Socioeconomic Planning Secretary Ernesto M. Pernia said attaining 7-percent to 8-percent growth in the medium term depends in part on the Natural Capital Accounting (NCA) program.
The NCA was instituted in the Philippine Development Plan 2017-2022 and the AmBisyon Natin 2040 highlighting government’s recognition of the importance of sustaining and preserving ecosystems for economic growth.
“We want to ensure that our pursuit of economic growth will not compromise our future,” Pernia said.
“This is why we [Neda] have been continuously supporting natural capital accounting or valuation to help Filipinos understand the true economic value of these resources and change the way we regard them.”
He also cited environmental costs to economic growth and acknowledged the Philippines has not been very successful in enforcing laws that safeguard the environment. The NCA will held address this since it supports the growth and performance of the economy, strengthens the resiliency of communities from climate change and disasters, and improves the welfare of the poor and marginalized members of society.
“While numerous laws and regulations have been passed to protect, conserve and sustain our natural resources, their enforcement have been weak and inadequate,” Pernia said.
Pernia made the remarks at the National Conference on NCA with the theme “Accounting Nature: Capitalizing Partnerships for the Future” last week.
The two-day conference served as a platform showcasing work on NCA and exchange information and experiences on various related efforts from the both local and international arena.
The event was also a venue for planners, policymakers, scientists, practitioners and advocates to further present how natural resource accounting and valuation can provide a more holistic view of the country’s economic performance.
An estimated number of 200 participants from various agencies and institutions, including the departments of Finance, Budget and Management, and Agriculture, and Climate Change Commission (CCC), legislative offices, academe, civil-society organizations and private sector attended the event.
The conference was organized in collaboration with the World Bank and in coordination with the Philippine Statistics Authority, Department of Environment and Natural Resources, Laguna Lake Development Authority, and Palawan Council for Sustainable Development.