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Philippines PMI February 2019

Philippines: Manufacturing conditions ease to a six-month low in February

The manufacturing Purchasing Managers’ Index (PMI), produced by Nikkei and IHS Markit, inched down to 51.9 points in February from 52.3 points in January, which marked a six-month low for the survey. Nevertheless, the index remained above the critical 50-point threshold that separates expansion from contraction in the manufacturing sector.

While the health of the manufacturing sector continued to improve in February, new orders rose at the softest pace in seven months. On the other hand, new export orders rose for the first time in six months, suggesting the softening new demand was due to domestic factors, while production growth accelerated in the month. Due to sustained demand, employment rose modestly, following January’s temporary dip, while purchasing activity picked up in February. Delivery times were relatively stable, although some firms continued to be affected by port congestion and shortages of raw materials.

On the price front, input cost inflation softened in February, although firms’ anecdotes spoke of the effects of higher raw materials and gasoline prices and the effects of the TRAIN tax laws. In order to protect profit margins from higher costs, firms raised output prices modestly in the month.

Finally, firms’ business confidence rose to a six-month high in February, lifted by new project prospects and solid economic conditions.

Commenting on February’s print David Owen, economist at IHS Markit, noted:

“Weaker new business growth led to a lower headline PMI in February. […] There is little cause for concern though, with the PMI having been relatively strong over the last few months. With inflation falling and employment strong, manufacturers will likely see improved business conditions ahead.”

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