Philippines: Manufacturing sector strengthens in March
The manufacturing Purchasing Managers’ Index (PMI) rose to 51.5 in March, up from 50.8 in February according to a release provided by Nikkei and IHS Markit. The PMI thus moved further above the critical 50-point threshold which separates expansion from contraction in the manufacturing sector.
March’s rise was due faster growth in output and new orders. Growth in new orders gained steam on the back of rebounding exports, to which firms reacted by scaling up production. However, companies continued to reduce staff levels, although to a lesser extent than in February.
On the price front, input prices rose notably due to higher excise taxes and higher global commodity prices. This led to growing costs and selling prices, with both rising at the fastest clip on record. On a more positive note, businesses grew more optimistic in March, due to new product launches and planned business expansions.
Commenting on the release, Bernard Aw, Principal Economist at IHS Markit, noted that:
“Philippines manufacturing growth is on course for its weakest quarterly gains in the survey history, according to the Nikkei PMI data. However, the rise in the headline index points to signs that the adverse impact on demand from the new excise taxes could be fading.
One area of concern is the extent to which sharp cost increases will feed through to consumer prices which, in turn, would affect future monetary policy.”