• The Philippine manufacturing sector contracted in March, the first time in 19 months, according to S&P Global
• The S&P Global Philippines Manufacturing PMI fell to 49.4 in March from 51.0 in February, signaling a downtick
• There was a drop in new orders, foreign demand weakened, and manufacturing output shrank, leading companies to pause hiring
• But business confidence hit a four-month high, with firms optimistic about future demand
The Philippine manufacturing sector contracted in March, the first time in 19 months, according to S&P Global.
The Philippines’ Purchasing Managers’ Index (PMI) dropped to 49.4 from 51.0 in February and falling below the neutral 50.0 threshold for the first time since August 2023, reflecting weakening demand and production cuts, based on the latest S&P Global Philippines Manufacturing PMI (Purchasing Managers’ Index).
The downturn was driven by a fresh drop in new sales, ending an 18-month streak of order growth. Both domestic and foreign demand weakened, with firms citing increased competition and fewer client orders. As a result, companies scaled back production, bringing an 11-month growth streak in output to a halt.
“The Filipino manufacturing sector indicated a renewed deterioration in operating conditions in March. Furthermore, the health of the sector worsened at the strongest pace since August 2021,” said Maryam Baluch, economist at S&P Global Market Intelligence.
Hiring activity also slowed, with firms opting to maintain current staffing levels, citing sufficient manpower to meet operational needs. Meanwhile, unfinished work declined after accumulating at its fastest pace in nearly two years in February.
Despite these challenges, manufacturers remained optimistic about future growth, with business sentiment reaching a four-month high. Many firms anticipate a rebound in demand over the next year, supported by new projects and client wins. This outlook contributed to a 16th consecutive monthly rise in purchasing activity, as businesses continued stockpiling materials in anticipation of stronger sales.
“Nonetheless, businesses remain optimistic in their year-ahead production forecasts, with confidence levels at a four-month high. Optimism was reflected in firms’ decisions to maintain their purchasing activity and build stocks. At the same time, inflationary pressures remained relatively contained and subdued in the context of the series history,” added Baluch.
Price pressures remained moderate, with input costs rising due to higher material prices. However, both cost burdens and selling prices increased at slower rates compared to historical trends.
READ: PH manufacturing slows for second consecutive month in Feb
