Philippines: Downturn in the manufacturing sector deepens in April
May 4, 2020
The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, fell further to 31.6 in April from 39.7 in March, hitting a new series low. Consequently, the index remained mired below the 50-threshold that indicates deteriorating business conditions in the sector over the previous month.
Production, new orders and export sales all declined at the sharpest rates in the survey’s over four-year history in April as the extension of the lockdown—which is currently in place until 15 May—suppressed activity in the sector. In response, manufacturers notably reduced purchasing and laid off more workers in April; however, the pace of job shedding eased from that of March. Disruptions from the virus continued to weigh heavily on supply chains, with supplier delivery times lengthening to the greatest extent on record.
Input costs decreased in April due to weaker demand, although raw material shortages moderated the decline. In response, manufacturers reduced output charges in a bid to revive sales.
Goods producers’ confidence improved slightly in April from a series low in March as manufacturers were more optimistic that the lockdown measures would be lifted in the near term.
Commenting on April’s result, David Owen, economist at IHS Markit, stated:
“A key factor in this crisis will be employment. April data suggested the decline in job numbers softened from March, though it was still marked overall. However, a quick return to activity may bring about a strong recovery in jobs.”
Author: Lindsey Ice, Economist