The manufacturing sector showed another drop in production for August, latest data from the IHS Markit’s Purchasing Managers’ Index (PMI) show.
“The IHS Markit Philippines Manufacturing PMI fell for the second month running from 48.4 in July to 47.3 in August, to signal a stronger deterioration in operating conditions,” it said.
“That said, the index remained well above its record low of 31.6 in April,” it added.
IHS Markit economist David Owen traced the decline to the government’s reimposition of stricter qurantine measures to Metro Manila and its nearby provinces, which again, halted business operations.
“The recent steep increase in new COVID-19 cases led the government to impose stricter quarantine measures in Manila and the surrounding provinces in August… As a result, the Philippines Manufacturing PMI fell back to its lowest in three months in August,” Owen said.
“At 47.3, the reading signaled a solid decline in the health of the sector. The downturn was linked to a sharp drop in new orders and a subsequently steep reduction in output, as client demand fell notably due to the new restrictions,” he added.
According to him, job losses remained apparent as firms continue to trim capacity at a steep rate to adapt to the new environment.
Still, the analyst said that businesses were less confident about an increase in output in the next six months, reflecting uncertainty over the pandemic’s path.
Temporary MECQ effect
Acting Socioeconomic Planning Secretary Karl Kendrick Chua said the reimposition of the modified enhanced community quarantine (MECQ) measure in the first half of August in Metro Manila and nearby provinces will have a temporary economic impact.
“Although this is expected to weigh down on the economy in the short term as resumption of business operations is limited, this will give our health system some respite amid the recent rise in COVID-19 cases,” Chua explained.
“It will also help improve productivity in the near-term as more lives are saved and consumer confidence restored,” he added.