The Philippine purchasing manufacturing index compiled by S&P Global Market Intelligence declined for the second straight month to 52.5 in March from 52.7 in February and 53.5 in January, but remained in a positive mode.
Economists from the Hexagon Perspective, the market analytics unit of Rizal Commercial Banking Corp. said higher prices/inflation, higher interest rates and borrowing costs; the risk of recession in the US; foreign direct investments; manufacturing; and other global business and economic activities might have partly slowed down the index.
Among the issues that could have offset PMI growth were the complicated economic reopening of China due to COVID resurgence; the continued Russia-Ukraine conflict that led to relatively higher global commodity prices; and some disruption in the global supply chains amid sanctions on Russia by some countries, the economists said.
They said that despite these developments, the Philippine PMI had been on an expansion mode or above 50 points for the 19th straight month and for most months since 2021 due to record high OFW remittances, BPO revenues, near record high imports, better unemployment and employment data; revert of foreign direct investments to pre-pandemic highs, improvement in the tourism sector and continued increase in infrastructure spending.
“The sustained expansion mode in the local manufacturing PMI is still a good signal, as one of the major sources of economic growth, despite after the seasonal increase in business and economic activities during the holiday season towards the end of 2022,” said RCBC chief economist Michael Ricafort.
PMI is a gauge of Philippine manufacturing activities. A PMI of over 50 is considered an expansion of manufacturing activities.
Ricafort said the latest local manufacturing PMI gauge generally improved in recent months amid measures to further reopen the economy towards greater normalcy, such as the further improvement of local and foreign tourism and the resumption of the nationwide face-to-face or in person schooling since August 22, 2022 that supported the recovery of many affected businesses and industries, including some manufacturers.
The continued recovery of local and foreign tourism as restrictions eased, especially since February to March 2022, also supported the recovery of related or allied industries, including some manufacturers, he said.
Group tours from China resumed since the latter part of January 2023, providing another source of growth for foreign tourism and for the overall economy.
Hexagon Perspective said the economic recovery and PMI manufacturing gauge could again pick up in the coming months, especially if the new COVID local cases are consistently better controlled/managed through accelerated vaccination/booster doses vs. COVID-19 and the intensified observance of minimum health standards/protocols.