Manufacturing growth slows to 9-month low
Credit to Author: ANNA LEAH E. GONZALES| Date: Thu, 02 May 2019 16:28:48 +0000
GROWTH in the country’s manufacturing sector fell to a nine-month low in April as output slowed and new export orders dropped, a IHS Markit/Nikkei survey found.
Results of the poll released on Thursday showed that the seasonally adjusted Philippines Manufacturing Purchasing Managers’ Index (PMI) fell to 50.9 last month from 51.5 in March. The current figure is the same recorded in July 2018.
The PMI is a composite index representing the weighted average of new orders, output, employment, suppliers’ delivery time and stocks. Readings above 50 signal an expansion; below that, a contraction.
“April PMI revealed an even more subdued picture for the Philippines,” IHS Markit economist David Own said in a report. “With first-quarter results already reflecting weaker manufacturing growth than at the end of last year, the latest data did little to raise hopes for the second quarter.”
“Output expanded at the weakest rate since September 2017, while new order growth was dampened by a quicker drop in export sales,” he added.
The report cited the lack of raw materials as the main reason manufacturing firms curtailed output or stopped production.
The results also showed that the increase in sales of manufactured goods was at its slowest since last July.
“This was, in part, affected by a sustained drop in new export orders. The pace of decline was the fastest so far this year, linked to a lack of client demand from overseas,” IHS Markit/Nikkei said.
The report said the weaker new orders also led to limited input supply in April.
The survey also showed that employment dropped for the second straight month, albeit these are mostly linked to a large number of resignations.
Vendor performance, however, improved for the first time in nine months, due to shorter delays from the recent port congestion in Manila.
“There was some positive news from the survey, as firms reported an alleviation of import delays due to the recent port congestion at Manila,” Owen said.
“This led to the first improvement in supplier delivery times in nine months, although slowing output growth still led manufacturers to reduce stock levels,” he added.
Only a small proportion — 6 percent — of firms raised prices last month, mostly related to the higher cost of raw materials. Some companies, however, lowered their prices to remain in line with global prices.
Business sentiment toward the year-ahead slightly rebounded in April from a record-low in March. It added, however, that optimism was still “subdued.”
“With [the May 13 midterm elections], production growth may be stifled again in the next survey. As such, it is looking like the second quarter may prove to be a challenging one for the manufacturing sector,” Owen said.
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