PH manufacturing PMI drops in Feb
Credit to Author: ANNA LEAH E. GONZALES| Date: Fri, 01 Mar 2019 17:46:49 +0000
The country’s manufacturing sector remained sluggish last month, an IHS Markit/ Nikkei survey found, with new order growth the weakest in seven months.
Survey results released on Friday showed the seasonally adjusted Purchasing Managers’ Index (PMI) hit a six-month low of 51.9 in February — the lowest since August 2018 — from 52.3 in January.
The PMI is a composite index that represents the weighted average of new orders, output, employment, suppliers’ delivery time and stocks. Readings above 50 signal an expansion, below that a contraction.
Factory output improved marginally from January due to stronger demand, new branches, and machinery. Last month’s production level, however, remained below the series average.
Purchasing activity was also still weaker than average. IHS Markit/Nikkei said that new orders “rose solidly” in February but the rate of growth was the softest since July.
“Nearly 20 percent of panellists saw higher factory orders, mentioning new clients and larger volumes of repeat orders. At the same time, 15 percent of firms registered a fall in work,” it said.
Overseas demand increased for the first time in six months as the new export orders index rose above the 50.0 neutral mark on the back of higher customer orders. The overall rate of expansion, however, was still modest.
“Weaker new business growth led to a lower headline PMI in February,“ IHS Markit economist David Owen said.
“That said, the survey also pointed to an increase in export orders for the first time since August, suggesting that softer demand signals were predominantly from the domestic market,” he added.
“There is little cause for concern though, with the PMI having been relatively strong over the last few months.”
Employment, meanwhile, slightly went up after posting a decline in January as higher new orders resulted in more jobs. IHS Markit/Nikkei said other companies reported hiring workers to replace those that had recently resigned.
The survey also noted that manufacturers continued to increase their selling prices last month.
“Output charges set by Filipino manufacturers rose solidly in February. However, the rate of inflation was slightly weaker than in January, continuing the trend of softer price rises compared to most of 2018. Firms that raised their fees generally linked this to higher raw material prices,” Nikkei said.
Owen said that with inflation easing and growth in employment, “manufacturers will likely see improved business conditions ahead.”
Results of the survey revealed that most manufacturing firms continue to be upbeat as 63 percent of respondents expect activity to improve in the next 12 months driven by new projects, business development, and strong economic conditions.
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