Manufacturing activity in the Philippines and ASEAN fell in August
Manufacturing activity in the Philippines and other Southeast Asian countries slowed in August, owing to an increase in instances of the coronavirus disease 2019 (Covid-19) and an increase in the Delta variant in the area.
According to IHS Markit, the Philippines’ manufacturing purchasing managers’ index (PMI) fell to 46.4 in August from 50.4 in July.
According to IHS Markit, the manufacturing PMI fell for the first time since May, and it was one of the steepest drops in 15 months.
Despite the decline in manufacturing activity, the Philippines’ PMI is better than Asean’s average manufacturing score of 44.5 and only slightly lower than Thailand’s index of 48.3, which saw a slowdown in its manufacturing sector last month.
Myanmar had a manufacturing index of 36.5 in August, Vietnam had a manufacturing index of 40.2, Malaysia had a manufacturing index of 43.4, Indonesia had a manufacturing index of 43.7, and Singapore had a manufacturing index of 44.3.
The worsening of the country’s industrial environment, according to IHS Markit economist Shreeya Patel, came as no surprise following the introduction of enhanced community quarantine (ECQ) in Metro Manila and tightening of community quarantine measures in surrounding provinces last month.
“Factories and their customers in the (Mega) Manila region stopped their production lines once again in an attempt to halt the spread of the new Delta variety,” Patel added.
Production volumes decreased in August, according to IHS Markit, due to reduced client demand.
According to the study, travel limitations and the shutdown of certain companies resulted in reduced production needs and staff layoffs.
Meanwhile, although falling to a four-month low in August, manufacturers’ prognosis for the next 12 months remains optimistic.
“On a more positive note, businesses’ outlook forecasts remained upbeat, due to optimism that the recent slump is just transitory. When it comes to pricing, lower input costs indicate that the strong price pressures that have been there since the beginning of the year are beginning to subside,” Patel added.
The quicker deployment of Covid-19 vaccinations is critical to the region’s overall economic confidence.
“Vaccination remains critical, as it is in other areas, in limiting the spread of the illness and its variations. Policymakers have emphasized the necessity of immunizing the population, which they hope to do by early next year. “Firms will hope that supply-chain disruptions in vaccinations are addressed to avoid this being pushed back again,” Patel said.
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