Philippines PMI May 2021


Philippines: Manufacturing PMI edges up in May pointing to near stabilization in manufacturing activity

June 1, 2021

The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, edged up to 49.9 in May, following April´s 49.0. As a result, the PMI remained marginally below the crucial 50-threshold, signaling a near stabilization in manufacturing sector conditions, compared to the previous month.

May’s improved reading largely reflected a marginal fall in new business, amid signs of a recovering domestic demand and supported by a marked increase in new export orders. Similarly, output contracted a softer pace on the back of the reopening of several factories but was still weighed on by material shortages. Against this backdrop, firms reduced again their employment levels in a bid to reduce operating costs. However, manufacturers remained optimistic with regards to output in the coming year, amid the progressing vaccine rollout. On the inflation front, despite somewhat softening from the previous month, logistics disruptions and raw material scarcity kept input cost inflation well-above series average. This, prompted firms to hike their selling prices at the sharpest rate since November 2018.

Shreeya Patel, economist at IHS Markit, said:

“A surge in COVID-19 cases and ECQ measures last month forced the Filipino economy back into contraction territory. May PMI data will therefore be welcomed as it revealed a swift movement towards stabilisation with some businesses already resuming their operations. […] Policy-makers are working towards securing enough vaccines to inoculate a large proportion of the population. The rollout must gain momentum to prevent another tightening of measures and to encourage an economic recovery, however."

Euben Paracuelles and Rangga Cipta, analysts at Nomura, stress the impact of the recent restrictions on the growth outlook and warn that the country remains susceptible to Covid-19 flare ups:

“The lockdown in Manila and nearby areas from late March until mid-May represents a significant disruption to economic activity, and the subsequent re-opening was again followed by an increase in new daily cases. This suggests GDP growth in Q2 will deteriorate sharply before picking up in H2. […] The delivery of vaccines improved after significant delays, but the rollout has still been relatively slow, with 5.4mn doses administered by early June (or around 4% of the population with at least one dose). This supports our assumption of a vaccine pivot point only in Q1 2022, indicating the country remains vulnerable to recurring outbreaks.”

FocusEconomics Consensus Forecast panelists see manufacturing output rising 6.0% in 2021, which is down 0.9 percentage points from the previous month’s estimate. For 2022, the panel expects manufacturing output to increase 5.6%.


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Philippines PMI Chart

Philippines PMI May 2021 1

Note: Philippines Manufacturing Purchasing Managers’ Index. Readings above 50 indicate an overall increase compared to the previous month while readings below 50 indicate an overall decrease.
Source: IHS Markit.

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