Philippines: Manufacturing PMI plunges to survey-record low in March
The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, nosedived to 39.7 in March—the lowest level in the series’ history—from its over one-year high of 52.3 in February. Consequently, the index plunged markedly below the 50-threshold that indicates deteriorating business conditions in the sector over the previous month.
Manufacturing operating conditions were pummeled by the economic shock of the Covid-19 global pandemic, which resulted in a lockdown of Luzon Island—a manufacturing hub in the Philippines. Factory shutdowns caused output to tumble at the sharpest rate on record, while new business inflows also diminished at the quickest clip in the series’ history. Consequently, manufacturers laid off workers at a historic rate.
Disruptions from the virus continued to weigh heavily on supply chains, with supplier delivery times lengthening to the greatest extent on record. Input cost inflation decelerated in March largely as a result of the fall in global oil prices. In response, manufacturers slashed output charges in a bid to boost sales.
Consequently, goods producers’ confidence fell to the lowest level in the series’ history as manufacturers are increasingly concerned over the long-term impact of the pandemic.
Commenting on March’s deterioration, David Owen, economist at IHS Markit, stated:
“The COVID-19 pandemic took its toll on goods production in the Philippines in March […] Unsurprisingly, businesses were much less positive regarding the 12-month future period. With no one knowing the full timeline of the pandemic, the extent of the economic impact remains largely unknown.”