Thailand
Philippines: Factory activity slows further in April
MANILA, Philippines — Philippine manufacturing activity recorded a sharp downturn in April following the severe Luzon-wide quarantine that locked down a large section of the economy, according to the latest survey of IHS Markit Philippines.
IHS Markit said its final Philippine manufacturing Purchasing Managers’ Index (PMI) declined further to 31.6 in April from 39.7 in March, well below the expansionary territory and a new record low in series history as a reading of below 50 indicates deteriorating business conditions in the sector.
Declines across all indicators were recorded in March as manufacturers struggle to cope with movement restrictions during the lockdown to slow the spread of the coronavirus disease 2019 or COVID-19.
The headline PMI provides a quick overview of the health of the manufacturing sector based on the weighted average of five indicators: new orders (30 percent weight), output (25 percent weight), job creation (20 percent), supplier delivery times (15 percent) and inventories (10 percent).
IHS Markit said that output, new order and export sales declined at record paces in April. Manufacturers also cut their workforce although fewer workers were laid off in April compared to March.
Hampered supply chains also led suppliers to struggle with deliveries, leading to a marked increase in delivery period for the ninth month running.
With limited operations, manufacturers also reduced input purchases at the quickest pace since the survey for the Philippines began in January 2016. Pre-production inventories fell substantially, while stocks of finished goods decreased at a sharper rate.
With diminished demand, firms lowered prices in a bid to boost sales during the lockdown.
“The Philippines Manufacturing PMI joined a chorus of data demonstrating the widespread and severe impact of lockdown measures on the global economy in April,” said IHS Markit Economist David Owen.
He said that it will take some time for domestic manufacturing activity to normalize after the quarantine measures are eased as producers would continue to struggle with supply and demand overseas.
“Manufacturers also face difficulties with both overseas supply and demand, with exports falling sharply and supply chains struggling amid the pandemic. A removal of lockdown measures in the Philippines may temper these issues, but they will likely remain in some form for the duration of this global crisis,” Owen said.
In line with this, job creation will also take time to recover.
“A key factor in this crisis will be employment. April data suggested the decline in job numbers softened from March, though it was still marked overall. However,a quick return to activity may bring about a strong recovery in jobs,” Owen said.
Source: https://www.philstar.com/business/2020/05/05/2011775/factory-activity-slows-further-april