Quarantines in MM, Cebu City Drag Manufacturing Score in July

The IHS Markit’s Manufacturing Purchasing Managers’ Index (PMI) for the Philippines reported a decline in July at 48.4 from a score of 49.7 in June.

In its Philippines Manufacturing PMI report released Monday, it said the sustained general community quarantine (GCQ) in Metro Manila and imposing of enhanced community quarantine (ECQ) in Cebu City in July have contributed to the decline of manufacturing conditions in the country last month.

“The latest Philippines Manufacturing PMI data showed that conditions are yet to improve at the start of the third quarter. It was hoped that June PMI numbers would signal the start of a recovery for manufacturers, as output tentatively increased. However, production levels dropped back into contraction territory in July, while new orders decreased for the fifth month in a row,” IHS Markit Economist David Owen said.

President Rodrigo Duterte placed Cebu City under ECQ for one month from June 16 before downgrading its status to a less stringent community quarantine measure on July 16.

Cebu City is now under modified general community quarantine (MGCQ) but Metro Manila, along with manufacturing hubs in the country Bulacan, Cavite, Laguna, and Rizal, will be reverted to modified ECQ from GCQ starting August 4.

The report added that manufacturers have seen continuous decline in new orders, export orders, and hiring.

It said the local restrictions have mainly affected new export orders even foreign markets have eased their Covid-19 measures.

“While domestic demand may stabilize, it will be important for businesses to re-strengthen foreign sales in order to recover from this period of (likely) deep recession,” Owen said.

However, local business expectations for the next 12 months weakened for the first time since March.

IHS Markit added more companies were pessimistic as they expect Covid-19 to have a long-term impact on production. (PNA)