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The Philippine manufacturing sector returned to growth territory in May 2026 supported by renewed growth in output and new orders
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The manufacturing sector’s headline PMI posted a reading of 50.8 in May 2026 from 48.3 in April 2026, marking a return to growth territory albeit being modest and historically subdued
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The overall expansion was driven by a fresh rise in new orders and raised production levels
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Supply chain disruption intensified with lead times for inputs lengthening to one of the greatest extents in nearly a year-and-a-half amid shipping delays as companies decided to consolidate orders to limit costs
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According to qualitative evidence, the war in the Middle East had driven up fuel and raw material prices further, resulting in manufacturers facing greater cost burden
The Philippine manufacturing sector returned to growth territory in May 2026 supported by renewed growth in output and new orders, 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 – posted a reading of 50.8 in May 2026 from 48.3 in April 2026, marking a return to growth territory albeit being modest and historically subdued. A reading above 50 indicates an overall increase compared to the previous month, and below 50 an overall decrease.
“The latest PMI data for the Filipino manufacturing sector presented a mixed picture. While manufacturers registered renewed growth in output and new orders, supply-chain disruption and cost pressures worsened as the Middle East conflict entered its third month,” S&P Market Intelligence economist Maryam Baluch said in a statement.
The overall expansion was driven by a fresh rise in new orders, which followed a sharp reduction in April. S&P Global said improved client demand and new customer wins were said to have driven growth.
READ: PH manufacturing contracts in April as orders drop
Underlying data hinted that the upturn stemmed from improved domestic demand as the exports picture remained bleak, with new sales from abroad falling at the sharpest pace since July 2020.
Nonetheless, the uptick in overall new business encouraged firms to raise their production levels at a solid pace in May, after growth had stalled in the survey month prior. The upturn was the most marked in three months and above the series average.
Supply chain disruption, however, intensified. Lead times for inputs lengthened to one of the greatest extents in nearly a year-and-a-half amid shipping delays as companies decided to consolidate orders to limit costs.
According to qualitative evidence, S&P Global said the war in the Middle East had driven up fuel and raw material prices further, resulting in manufacturers facing greater cost burdens. The rate of inflation was the fastest since August 2022 and marked overall.
Filipino goods producers raised their selling prices midway through the second quarter. Anecdotal evidence highlighted that many companies passed higher costs to customers, with the rate of increase the second sharpest in three-and-a-half years, only surpassed by April.
The fresh rise in new orders was insufficient to revive purchasing activity at manufacturers. Additionally, the third monthly decline in buying activity was often attributed to higher prices for raw materials. The pace of decrease was solid and broadly similar to that seen in April. Instead, companies turned to their inventories to meet production requirements.
Filipino goods producers rapidly reduced their stocks of purchases in May. In fact, the downturn was the steepest in six years. Stocks of finished goods were also down for a second month running, albeit to a lesser extent.
Turning to employment, job shedding was recorded in May. According to anecdotal evidence, the drop was linked to a combination of resignations and layoffs. The pace of decrease was the greatest in two years but moderate overall.
Nonetheless, manufacturers were able to lower their backlogs of work in May. The pace of depletion was marginal, however.
Filipino manufacturers were more upbeat about the outlook for output in May. The level of positive sentiment was the highest in 18 months, as firms were hopeful that demand conditions will improve.
