MANILA, Philppines—Manufacturing returned to “marginal” year-on-year growth in June with the purchasing managers’ index (PMI) rising to 50.8 as quarantine restrictions eased in areas accounting for half the economy, being the location of many manufacturers and exporters.
The above-50 PMI in June indicated expansion in manufacturing activities and reversed the below-50 indices, which meant contraction, in April and May. This was the period when National Capital Region (NCR) Plus — Metro Manila and the provinces of Bulacan, Cavite, Laguna and Rizal — was placed under the most stringent lockdown to contain a surge in COVID-19 cases.
“Declines across output, new orders and employment eased while exports rose sharply during the month,” said Shreeya Patel, economist at London-based global information provider IHS Markit Ltd., in a report on Thursday.
“Expectations of greater production levels were reflected in firms adding to their stock levels, amid hopes of a stronger third quarter,” Patel said.
However, Patel said the remaining quarantine restrictions still stifled domestic demand, while port congestions slowing global trade were hampering export sales.
It did not help that “rising raw material and transportation costs were often faced by goods producers during the month,” Patel said. “Output prices rose further, and at the quickest rate in over two years, suggesting firms are committed to somewhat cushioning any potential losses.”
“With the vaccination program still in the early stages, controlling the spread of the pandemic remains principal to preventing another series of tightening restrictions. Firms, in the meantime, will hope issues surrounding the supply of materials are resolved,” Patel said.
The Philippines nonetheless bucked the trend in Asean where the regional PMI slipped to 49 in June from 51.8 last May as most other countries in the region posted negative indices when factory production and order books fell due to tighter lockdown measures and supply bottlenecks.