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Philippines: Local factory output soars to 5-year high in April as restrictions ease
MANILA, Philippines — Philippine factories shrugged off pandemic aches in April as manufacturing output posted its best finish since November 2017, all while weathering a persistent disruption in the global supply chain.
In a statement on Monday, S&P Global, formerly IHS Markit, reported the Philippines’ purchasing managers’ index (PMI), a measure of factory output, surged to 54.3 in April from 53.2 in March.
The latest print — a result of a monthly survey of around 400 firms — settled past the 50 no-change threshold separating expansion from contraction. It also marked the third consecutive month of output growth amid easing mobility restrictions due to falling virus cases.
But Maryam Baluch, an economist at S&P Global, said the April PMI figure still faced disruptions owing to developments on the international front.
“Although output growth picked up in April, global headwinds, notably from the Russia-Ukraine war and lockdowns in China, led to further pressure on supply chains. Furthermore, the rate of input cost inflation eased only slightly from the record high seen in March, leading to another sharp increase in selling prices,” Baluch said.
Parsing S&P’s report, the local manufacturing sector saw gains from relaxed restrictions, leading to faster production output and new orders in April. This was the third straight month that output and new orders expanded since March, when the PMI bested November 2018 figures.
Likewise, the performance was fueled by rebounding client demand, which S&P noted was the highest uptake of pre-production inventories on record.
But input price and output charge inflation remained high, despite slightly decreasing from the record-highs observed in March.
Despite those positive developments, demand from international clients slid down in the second consecutive month as shipping costs and pandemic-related restrictions impeded new export orders from materializing.
For Leonardo Lanzona, an economist at Ateneo De Manila University, base effects had much to do with the improvement despite better business conditions in April.
“The increase can be simply reflective of the easing Covid restrictions. The country had the most stringent lockdown compared to the rest of the world. Hence this can simply be due to base effects,” he said in a text message.
“I don’t expect this to persist as the world condition are not expected to increase. While the government has introduced a number of reforms, the financial and trade outlook remains weak,” Lanzona added.
Source: https://www.philstar.com/business/2022/05/02/2178225/local-factory-output-soars-5-year-high-april-restrictions-ease