THE country’s manufacturing sector recorded a “fractional uptick” in its performance towards the end of 2021, supported by higher demand and output expansion.
In its report on the country’s Purchasing Managers Index (PMI), IHS Markit said on Monday that the Philippines’ PMI hit 51.8 in December, up from the 51.7 PMI recorded in the previous month.
A country’s PMI is meant to gauge the health of its manufacturing sector. It is calculated as a weighted average of five individual subcomponents. Readings above 50 show growth in the industry while readings below the 50 threshold signal a contraction in the manufacturing sector.
“Although only modest, the latest uptick was the strongest in nine months, and broadly in line with the long-run series average,” the think tank said in its report.
IHS Markit said the improvement was partly driven by a quicker rise in new orders received by Filipino manufacturers on the back of favorable domestic demand conditions.
In contrast to domestic demand however, new export orders fell sharply and at the quickest rate for four months. Tighter restrictions in international markets, linked to the Omicron variant, led to the downfall.
The report also noted that production volumes expanded for the first time since March, albeit at only a slight pace. However, job shedding has now been seen in each of the last 22 months, with the latest fall the joint-softest since March.
Omicron remains a threat
IHS Markit said firms were optimistic that demand will continue to improve in the coming months, but warned that the new variant may threaten this rosy outlook.
“Supply-side issues and virus-related restrictions threatened the sector once again. Delivery delays were pronounced and often hindered production. Shortages meanwhile continued to drive up expenses, despite some signs of a moderation in input and output prices in December,” Shreeya Patel, economist at IHS Markit, said.
“Looking ahead, the Omicron variant will almost certainly hit the Philippines manufacturing sector, and in more ways than one. Supply-side issues are likely to persist while case numbers and input price inflation could climb further as we head into the new year,” Patel added.
On Monday, the Department of Health (DOH) reported 4,600 new cases with a positivity rate of 19.6 percent—the highest since October 24.
Image credits: Nonie Reyes