-
The Philippine manufacturing sector posted a relatively muted performance in March 2026, weighed on by the conflict in the Middle East
-
The manufacturing sector’s headline PMI ticked down to a three-month low of 51.3 in March from 54.6 in February, based on S&P Global’s Philippines purchasing managers’ index
-
Firms noted that the war in the Middle East had led to weaker demand from foreign clients
-
Average lead times for inputs lengthened for the fourth month running, with anecdotal evidence linking the latest round of delays to higher gas and fuel prices, and material shortages
The Philippine manufacturing sector posted a relatively muted performance in March 2026, weighed on by the conflict in the Middle East, according to the latest S&P Global purchasing managers’ index (PMI) survey data.
The manufacturing sector’s headline PMI–a composite single-figure indicator of manufacturing performance–ticked down to a three-month low of 51.3 in March from 54.6 in February. This highlighted a fourth straight monthly improvement in the health of the sector and one which was modest overall, but also marked a notable slowdown in the pace of growth, S&P Global noted.
READ: PH Feb manufacturing posts strongest performance in 8 years
“The war in Middle East weighed on the performance of the Philippines manufacturing sector, March PMI data showed,” S&P Global Market Intelligence economist Maryam Baluch said in a statement.
“Filipino manufacturers are exposed to shocks in oil and fuel prices rippling through global markets, as signalled via notable hikes in costs and charges, and softer demand conditions,” Baluch added.
Contributing to the relatively subdued picture, was an evident loss of momentum in new order growth.
Following a rapid increase in February, March data revealed a more constrained expansion.
Dampening the pace of increase in total new orders was a fresh decline in new export sales. While the latest downturn was modest, it marked the first month of contraction since last December.
Firms noted that the war in the Middle East had led to weaker demand from foreign clients.
In turn, firms adjusted their production levels. The upturn in output was moderate, however, the pace of growth was much softer than the sharp expansion seen in February, and was in fact the weakest in the current three-month sequence of increase.
Firms highlighted higher fuel prices and material scarcity due to the war in the Middle East weighed on growth.
In response to easing expansions in output and new orders, firms broadly paused their purchasing activity in March.
The respective seasonally adjusted index posted just below the neutral 50.0 mark, thereby concluding a three-month sequence of growth.
Indeed, S&P Global said the pause in buying activity helped alleviate some pressure on supply chains, with March marking a solid but a less pronounced deterioration in vendor performance.
Nonetheless, average lead times for inputs lengthened for the fourth month running, with anecdotal evidence linking the latest round of delays to higher gas and fuel prices, and material shortages.
With production rising, but firms facing difficulties in receiving inputs on time, companies opted to utilize their input stocks in March. Holdings of pre-production items fell modestly but for the first time in four months.
Higher energy (including fuel and gas) costs and material scarcity, stemming from the war in the Middle East resulted in both costs and charges rising in March. This followed slight reductions in the month prior.
Moreover, the rates of inflation across both price gauges were historically sharp.
Turning to employment, job creation was reported for a third month running in March. The pace of growth was marginal and the weakest in this sequence, however.
Backlogs of work, meanwhile, rose at a modest pace, which was the fastest in four months. Delays in receiving inputs meant that firms struggled to complete new work.
Filipino manufacturers were confident that production will pick up in the coming 12 months in March. The level of optimism ticked up further to a four-month high. Firms were hopeful that demand conditions will improve, which will help drive growth.
