Manufacturing still contracted in November but has improved compared to the previous month as export demand started recovering from a slump, London-based IHS Markit Ltd. said on Tuesday.
IHS Markit’s latest purchasing managers’ index showed the PMI rose to 49.9 last month from 48.5 in October, although still below the neutral 50-mark, which meant a year-on-year decline.
In a report, it said there was “near stability” in manufacturing conditions in the Philippines as output levels increased fractionally for the first time since June, job losses eased to the slowest pace in nine months, and work backlogs were “substantially” reduced last November.
In a statement, IHS Markit economist Shreeya Patel partly attributed the better November manufacturing performance to a “notable” improvement in foreign demand.
“Firms recorded only a fractional contraction in the number of new orders placed, as new orders from overseas markets rose moderately, helped by relaxed border restrictions,” IHS Markit said.
State planning agency National Economic and Development Authority (Neda) earlier noted a jump in exports to China last September, which it attributed to the latter’s “relatively accelerated return to full production after the mobility restrictions due to the pandemic.”
“The Philippine Trade and Investment Center in Shanghai expects China to remain as one of the Philippines’ top export markets and investment sources due to a strong interest and huge potential of Chinese-led trade and investments in the country. These efforts are strongly aligned with China’s Belt and Road Initiative which aims to plot long-term bilateral ties between the two countries,” Neda said in a recent report.
Despite these green shoots, Patel said domestic manufacturing recovery “may not be smooth as the health of the sector rests on the number of COVID-19 cases and the impact the virus has on the global economy.”
The Philippines currently has the second biggest number of coronavirus infections in Southeast Asia.
“While vaccine developments look promising, it is still unclear when restrictions will come to a complete end,” Patel said. INQ