MANILA – The Philippines’ manufacturing purchasing managers’ index (PMI) posted improvements in February despite pressures in the domestic market.
Global industry monitor IHS Markit reported Thursday that the country’s manufacturing PMI last month slowed down to 50.8 from January’s score of 51.7.
It noted that February’s index was also the second lowest reading for the Philippines in the manufacturing PMI survey history.
PMI is an indicator of the health of a country’s manufacturing sector based on five major indicators — new orders, inventory, production, supplier deliveries, and employment environment.
Indices above 50 signal improvements in the manufacturing sector, while readings below 50 show deterioration.
The report noted Philippine-based factories in February scaled up their production due to higher demand. Purchasing activity likewise increased last month.
Moreover, IHS Markit said despite the improvement in purchasing in February, this did not translate to a higher build-up of inventories last month as firms preferred to tap current stocks.
Delivery times were shortened in February, which was first since August 2017, due to improved delivery efficiency. The report said supply chain constraints eased last month.
On the other hand, employment dropped last month, “reflecting an ongoing lack of capacity pressure”.
Meanwhile, the IHS Markit survey noted the effects of the Tax Reform for Acceleration and Inclusion (TRAIN) Law on the sector.
“Survey data suggested the new excise taxes, which were implemented at the start of the year, continued to have an adverse impact on demand,” IHS Markit Principal Economist Bernard Aw said.
“While the influence of tax reforms is expected to fade in coming months, price pressures could still become more entrenched on rising imported inflation, which will add to calls for the Bangko Sentral ng Pilipinas to raise interest rates,” Aw added.