The country’s manufacturing sector continued to contract in November, but at a pace slower than a month earlier as operating conditions approached stabilization and production rose for the first time since June, an IHS Markit survey revealed on Tuesday.
Poll results showed that the Philippines’ seasonally adjusted Purchasing Managers’ Index (PMI) rose to 49.9 last month from 48.5 in October, which the London-based information provider said signaled a “movement toward stability.”
The latest reading is also the highest since September’s 50.1.
The PMI takes into account new orders, output, employment, suppliers’ delivery time, and stocks. Readings above 50 signal an expansion; below that, a contraction.
“The Filipino manufacturing sector showed promising signs of renewed recovery momentum in November as the headline PMI figure neared stabilization,” IHS Markit economist Shreeya Patel said in a report.
“Production rose for the first time since June as foreign demand improved notably from that seen in October,” she added.
According to the report, output volumes increased slightly on the back of the reopening of businesses and marginal reduction in new orders.
Overall demand improved in November. Companies saw the number of new orders placed dip slightly as those from abroad rose moderately on relaxed border restrictions.
Despite the increase in production, IHS Markit reported that unemployment lingered.
“Anecdotal evidence suggested [that] firms had sufficient capacity to meet incoming new orders, and cost-saving pressures led to further cuts in workforces,” the company said.
“That said, the latest fall was the softest in the current period of decline and eased considerably from that seen in October,” it added.
Supply chain disruptions continued in November, while higher raw material and transportation costs led firms to raise total costs.
IHS Markit said the inflation rate of these costs was the fastest since August, adding that businesses were able to partially pass the higher costs to consumers by slightly hiking selling prices.
The report said the 12-month outlook remained positive as developments on a vaccine raised hopes of the coronavirus disease 2019 (Covid-19) pandemic’s end next year. But Patel warned that “the path to recovery may not be smooth.”
“The health of the sector rests on the number of Covid-19 cases and the impact the virus has on the global economy. Whilst vaccine developments look promising, it is still unclear when restrictions will come to a complete end,” she said.