-
The Philippines’ purchasing managers’ index in October 2026 signaled further deterioration in the health of the manufacturing sector, as output and new orders remained in contraction territory
-
The manufacturing PMI moved further below the neutral mark of 50.0 in October with a reading of 49.1, down from 49.6 in September
-
S&P Global said some firms surveyed cited that weak demand and the current hot weather, linked by some survey panelists to El Niño, weighed on the two main contributors to the headline PMI index
-
Though pressures on supply chains eased slightly, with average lead times lengthening only mildly during October, supplier performance has deteriorated for an 11th time in as many months
The Philippines’ purchasing managers’ index (PMI) in October 2026 signaled further deterioration in the health of the manufacturing sector, as output and new orders remained in contraction territory.
The manufacturing PMI moved further below the neutral mark of 50.0 in October with a reading of 49.1, down from 49.6 in September, indicating a second consecutive monthly deterioration in operating conditions, according to the latest PMI survey by S&P Global.
A reading above 50 indicates an overall increase compared to the previous month, and below 50 an overall decrease.
S&P Global noted that although only modest, the PMI in October marked the third time this year that the sector’s health declined.
Continued reduction in both output and new orders were recorded in October, with contraction rates generally modest.
While output fell at a softer pace, however, the downturn in new orders deepened.
S&P Global said some firms surveyed cited that weak demand and the current hot weather, linked by some survey panelists to El Niño, weighed on the two main contributors to the headline PMI index.
Panelists noted that weak demand conditions were not only limited to domestic customers but also applied to customers abroad. As a result, new export orders remained in contraction.
READ: PH manufacturing contracts in Sept, first time since April
Nonetheless, the drag on total new orders from foreign sales lessened during the latest survey period and was only modest.
With production requirements down, however, buying activity was curbed to a greater extent in October. The latest decrease was strong and the fastest for 11 months.
Though pressures on supply chains eased slightly, with average lead times lengthening only mildly during October, supplier performance has deteriorated for an 11th time in as many months. Anecdotal evidence highlighted that material scarcity at suppliers had led to delayed deliveries and changes to schedules.
Shift in inventory preferences
The latest data indicated a shift in inventory preferences among Filipino goods producers at the start of the final quarter of 2026. After the reduction seen in September, October data highlighted a steady picture for pre-production inventories.
Stocks of finished goods were raised, albeit marginally, but for the first time in four months.
One reason some firms sought to expand their holdings was the expectation that production will pick up in the coming months.
In fact, confidence towards the year-ahead outlook for production bounced back up in October. The respective index more than recovered the ground lost in September to a near two-year high. Optimism was underpinned by hopes that improved demand and new projects and customers would drive output growth.
“However, stronger optimism has yet to translate into a recovery in orders or hiring. The Bangko Sentral ng Pilipinas’ latest 50-basis-point rate increase, taking its policy rate to 5.50%, could further restrain demand and investment through higher borrowing costs,” S&P Market Intelligence principal economist Siân Jones said.
Turning to employment, a fall was noted for a second straight month in October. While the rate of decrease was modest, it was stronger than in September, with anecdotal evidence attributing this to resignations. That said, firms managed to keep on top of workloads, with backlogs falling at a sustained and modest pace for a second consecutive month.
Lastly, prices pressures across the Philippines manufacturing sector moderated during the latest survey period. Both operating expenses and charges rose only modestly, as majority of respondents reported a steady month-on-month prices picture. However, where costs increased, this was linked to higher material prices, which were then passed on to customers.
