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Filipino manufacturing firms signaled a renewed decline in operating conditions in September, reporting a notable impact from high oil prices, strong international competition and weak demand during the month
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The Philippine manufacturing sector’s purchasing managers’ index posted at 49.6 in September, down from 54.9 in August, the first decline in the health of the sector since April
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Output, new orders and employment all dropped into contractionary territory
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Transportation delays and logistics issues stemming from higher oil prices continued to cause a deterioration in vendor performance in the Filipino manufacturing sector
Filipino manufacturing firms signaled a renewed decline in operating conditions in September 2026, reporting a notable impact from high oil prices, strong international competition and weak demand during the month, according to the latest purchasing managers’ index (PMI) survey by S&P Global.
The Philippine manufacturing sector’s PMI – a composite single-figure indicator of manufacturing performance – posted at 49.6 in September, down from 54.9 in August, signaling a fresh contraction in operating conditions in the goods-producing sector.
A reading above 50 indicates an overall increase compared to the previous month, and below 50 an overall decrease. The latest data indicated the first decline in the health of the sector since April.
Contributing to the headline figure was a renewed fall in production levels in September. S&P Global said the downturn in output was the first in nine months and the sharpest since November 2025.
PMI survey panelists suggested that lower production was due to reduced new order inflows and international competition.
Filipino manufacturers recorded a drop in new sales intakes at the end of the third quarter. S&P Global said the rate of contraction was only marginal, but contrasted with expansions seen in each of the previous four months.
READ: PH manufacturing strengthens further in August 2026
Similarly, new export orders returned to decline in September. Companies stated that higher prices were a deterrent to client purchases amid strong competition.
Although competition weighed on demand, S&P Global said firms raised their selling prices at a faster pace in September. The rate of charge inflation was steeper than seen in August, as firms sought to pass through higher costs to customers. That said, the pace of increase was below the series average.
The sharper hike in selling prices came despite a softer uptick in input costs. Greater operating expenses were linked to unfavorable exchange rate movements against the US dollar and higher oil prices. The rate of input price inflation was historically muted and the slowest for three months.
Lower new orders, meanwhile, led to a reduction in pressure on capacity, as backlogs of work declined in September. The contraction was the quickest since April, despite being only marginal.
A fall in production requirements also spurred a fresh round of job cuts at manufacturers. Job shedding was only slight, however.
With regards to purchasing activity, Filipino goods producers cut input buying for the first time since May. Firms also recorded reductions in both pre- and post-production inventories in September, with the latter recording the fastest drop in five months.
Logistics issues
Transportation delays and logistics issues stemming from higher oil prices continued to cause a deterioration in vendor performance in the Filipino manufacturing sector. Lead times for input lengthened strongly and to one of the greatest degrees in almost two years.
Still, manufacturers were confident of a rise in output over the coming year at the end of the third quarter.
That said, manufacturing firms were less certain in the year-ahead outlook “due to concerns regarding pricing power against international competition”, according to S&P Global Market Intelligence chief economist Maryam Baluch.
“The viability of continuing to absorb hikes in costs will be an important consideration in the coming months in bids to drive customer demand,” she added.
