Philippines factory activity among worst worldwide

by Czeriza Valencia (The Philippine Star), 3 Nov 2020

MANILA, Philippines — The downturn in output of the Philippine manufacturing sector was among the steepest in the world in the first nine months of the year, according to IHS Markit.

In a recent research brief, the market intelligence firm said that among the 31 countries monitored for manufacturing conditions from January up to September this year, six of the fastest contracting manufacturing sectors were in Asia.

“The steepest downturns so far this year have been recorded in Mexico, Indonesia, the Philippines and Japan, followed by South Korea and Vietnam,” said Chris Williamson, chief business economist at IHS Markit.

“That means five of the six fastest-contracting manufacturing economies have been located in Asia, causing the region as a whole to have markedly underperformed (compared to) the rest of the world so far, if China is excluded,” he said.

Among the countries monitored, only the manufacturing sectors of Brazil and China have so far registered expansions during the period, based on the output sub-indexes of Purchasing Managers’ Indexes (PMIs).

Slower downturns, meanwhile, were seen in the UK, Australia, Turkey and the Netherlands.

Williamson noted that while Asia, excluding China, has lagged behind in the wider global recovery, growth in the region has strengthened as the third quarter progressed because of improving exports.

The Philippines remains under the world’s longest community quarantine as the number of COVID-19 cases continues to rise although at a now slower pace.

The country’s growth engine, the National Capital Region (NCR) remains under the less stringent – but not the most stringent – community quarantine classification of general community quarantine (GCQ) after being reverted to the stricter modified enhanced community quarantine (MECQ) for two weeks in August.

The government has so far committed to work towards the continued easing of mobility restrictions in step with public health measures, recognizing that the country can no longer revert to stringent lockdowns because of economic damage.

This week, manufacturing PMIs for October will be released, which will give a clearer picture of recovery of factory output worldwide.

As hard economic data takes time, PMIs are now being increasingly used ,along with other high-frequency indicators such as mobility, to monitor the pace of economic recovery amid the pandemic.