Philippine Manufacturing Activity Returns to Growth

The S&P Global Philippines Manufacturing PMI rose to 50.8 in May 2026 from 48.3 in April, signaling a renewed improvement in manufacturing sector conditions. New orders increased after a sharp decline in April, supported by improved client demand and new customer wins, leading firms to raise production at a solid pace. However, export demand remained weak, with new orders from abroad falling at the sharpest rate since July 2020. Lead times lengthened to one of the greatest extents in nearly a year-and-a-half, amid shipping delays and efforts by companies to consolidate orders to contain costs. Input cost inflation accelerated to its highest level since August 2022, while output price inflation rose to its second-fastest pace in three and a half years. Firms reduced purchasing activity for a third month and cut staffing levels at the fastest rate in two years. Nevertheless, business confidence rose to an 18-month high amid hopes that demand conditions will improve.

The S&P Global Philippines Manufacturing PMI fell to 48.3 in April 2026 from 51.3 in March. This marked the first deterioration in the manufacturing sector since last November, dragged by a sharp decline new orders, which fell for the first time in five months and at the steepest rate since August 2021. Export orders also dropped at their fastest pace since mid-2020. Production levels stagnated. On prices, input cost inflation accelerated to its highest since December 2022, driven by higher energy and shipping costs linked to the Middle East war. Selling price inflation hit a 41-month high. As a result, firms cut buying activity for a second month and reduced staffing levels for the first time this year. Still, firms managed workloads, as reflected in a renewed fall in backlogs. Input lead times also lengthened solidly. Despite these headwinds, business confidence for the year ahead rose to a 17-month high, buoyed by expectations of a growing client base and improving demand trends.

The S&P Global Philippines Manufacturing PMI fell to 51.3 in March 2026 from 54.6 in February, marking a three-month low. Softer expansions in output and new orders were attributed largely to the war in the Middle East, which also led to a modest decline in new export sales. As a result, firms broadly paused purchasing activity, while inventories of pre-production items fell modestly for the first time in four months. Input prices surged amid higher energy costs and material shortages, causing operating expenses and factory gate charges to rise sharply. Employment growth continued for a third consecutive month but at the slowest pace in this sequence, while backlogs of work increased at the fastest rate in four months due to delays in receiving inputs. Despite these challenges, manufacturers’ sentiment regarding the 12-month outlook improved to a four-month high, with firms hopeful that easing geopolitical tensions and demand conditions will support growth in the year ahead.