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April 2026 marked the first month of deterioration for the Philippine manufacturing sector since last November with firms reporting reduced buying activity amid higher production costs
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The manufacturing sector’s headline PMI posted 48.3 in April 2026, down from 51.3 in March 2026, to signal a moderate deterioration in operating conditions
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New export orders fell at a notably accelerated and rapid pace, attributed to the closure of trade routes had resulted in halted shipments which created hesitancy among customers
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April marked a further deterioration in vendor performance with average lead times for inputs lengthened solidly, widely linked to the war in the Middle East
April 2026 marked the first month of deterioration for the Philippine manufacturing sector since last November with firms reporting reduced buying activity amid higher production costs, according to the latest S&P Global purchasing managers’ index (PMI) survey data.
The manufacturing sector’s headline purchasing managers’ index (PMI) – a composite single-figure indicator of manufacturing performance – posted 48.3 in April 2026, down from 51.3 in March 2026, to signal a moderate deterioration in operating conditions. A reading above 50 indicates an overall increase compared to the previous month, and below 50 an overall decrease.
The April index fell for a second straight month to post in contraction territory for the first time since the 47.4 PMI in November 2025, S&P Global said in a statement.
“The Filipino manufacturing sector started the second quarter of 2026 with a renewed worsening of operating conditions as the headline index fell below the neutral 50.0 reading for the first time in five months. Demand conditions took a notable hit with April data marking a sharp fall in new orders,” S&P Global Market Intelligence economist Maryam Baluch said.
Pulling down the headline figure was a fresh and sharp decline in new orders. The drop was the first in five months and the most marked since August 2021.
The demand picture for Filipino goods also worsened internationally, as new export orders fell at a notably accelerated and rapid pace. The downturn was the steepest since mid-2020. Firms noted that the closure of trade routes had resulted in halted shipments which created hesitancy among customers.
The decline in total new sales led Filipino manufacturers to see a stagnation in production levels in April. The respective seasonally adjusted index recorded a neutral reading of 50.0, marking a shift from the output growth observed in the opening quarter of 2026.
On the price front, the rate of input price inflation accelerated in April, signalling a rapid increase that was the fastest since December 2022. Firms attributed rising operating expenses to higher energy and shipping costs, both linked to the war in the Middle East.
Costs were largely passed on to clients through a sharp and stronger rise in factory gate charges. The rate of selling price inflation was the quickest in 41 months.
Firms registered a second straight monthly decrease in buying activity in April. With new orders down and higher prices for inputs and shipping, manufacturers instead turned to inventories to meet production requirements. Pre-production inventories were reduced for a second straight month, with the latest reduction steep and the most pronounced since May 2020. Holdings of finished items were cut back sharply following four successive months of stock building. The pace of decrease for the fastest in five months.
Higher costs also led Filipino manufacturing companies to make cuts to their staffing numbers in April. Renewed job shedding, though modest, was the first in 2026 so far.
Despite employment falling, firms managed to keep on top of their workloads as evidenced by a renewed fall in backlogs.
A sharp reduction in new orders helped alleviate pressures on capacity, according to S&P Global’s survey panelists.
Looking at supply chains, April marked a further deterioration in vendor performance. Average lead times for inputs lengthened solidly. Longer delivery times were widely linked to the war in the Middle East.
READ: Middle East conflict drags PH manufacturing to 3-month low in March
Despite all these, business confidence for the year ahead strengthened. The degree of confidence was historically strong and ticked up to a 17-month high. Positive sentiment was underpinned by hopes of a growing client base and improved underlying demand trends, according to anecdotal evidence.
