London think tank says poor roads, port infra slowing PH manufacturing

Poor roads and port infrastructure were partly the reasons for the modest growth of the Philippines’ manufacturing sector and a slow pace of factory output increase, according to a London-based think tank.

IHS Markit Ltd on Thursday (Jan. 2) said the Philippines’ factory output increased but at its slowest pace in 27 months due to poor roads and port infrastructures.

The latest IHS Markit Philippines Manufacturing Purchasing Managers’ Index showed that the seasonally adjusted Philippine manufacturing index (PMI) inched up to 51.7 percent last December from 51.4 percent in November 2019.

A PMI score above 50 meant there was an overall increase in manufacturing activity.

The higher December headline PMI was “signalling another modest improvement in manufacturing conditions that was in line with the average seen for the year,” IHS Markit said in a report.

“The improvement was partly driven by a solid rise in new orders received by Filipino manufacturers, with the rate of growth strengthening slightly from November,” said the IHS Markit report.

“Alongside a broad-based increase in sales, firms noted a slight upturn in new work from foreign clients, marking only the second monthly expansion in seven months,” IHS Markit said.

The think tank, however, said the growth in manufacturers’ production output fell to its lowest since September 2017.

“While stronger sales helped businesses to expand output overall, some firms mentioned that delays in input deliveries and difficulties in sourcing raw materials curtailed production,” IHS Markit said.

“Traffic issues were again a key factor influencing supplier delivery times, although panelists noted that typhoons and congestion at Manila port also contributed to the slowdown,” IHS Markit added.

Typhoons Tisoy and Ursula battered the Philippines in December.

In a statement, IHS Markit economist David Owen said that “most notably for manufacturers are clear supply-side issues that are restricting output.”

“Growing road and port congestion, particularly in Manila, remain a key feature of businesses’ concerns,” it said.

The Philippine government had sought to address bottlenecks in supply chains, including port congestion, through its ambitious “Build, Build, Build” program.

Production, however, is being limited in the meantime and “may remain so until these issues have been addressed,” said Owen.

Edited by TSB