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Philippines PMI February 2020

Philippines: Manufacturing PMI hits over one-year high in February

The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, rose to a 13-month high of 52.3 in February from 52.1 in January. Consequently, the index remained above the 50-threshold that indicates improving business conditions in the sector over the previous month.

Better operating conditions in February were the result of stronger new business inflows and sustained output, which was little changed from January. New export orders, which had struggled last year, also picked up in February at the fastest clip since July 2018. In light of improving demand, manufacturers ramped up hiring at a solid pace, but despite this the reduction in backlogs of work slowed to an almost four-year low. This was in part due to delays of raw material deliveries from China, which was hampered by the coronavirus outbreak. The virus also weighed heavily on supply chains in February, with supplier delivery times lengthening to the greatest extent in over two years and purchasing activity increasing at a weaker rate.

In terms of prices, input cost inflation accelerated; however, output charges rose at a softer pace due to strong competition.

Finally, goods producers’ confidence edged higher in February, as manufacturers were encouraged by ample work in the pipeline and expansion plans.

Commenting on February’s results, Joe Hayes, economist at IHS Markit, stated:

“February survey data signalled a continuation of respectful growth across the Philippines’ manufacturing sector. […] COVID-19 poses a downside risk, but this seems to have been isolated to the supply-side so far as exports grew at the fastest rate in over one-and-a-half years.”

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