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Filipino manufacturers started the second half of the year on solid footing as growth in new orders and production in July picked up to degrees not seen since February, before the Middle East conflict had broken out
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The Philippine manufacturing sector’s headline purchasing managers’ index rose to a five-month high of 51.8 in July, up from 50.9 in June
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Though the latest reading pointed to only a modest improvement in the health of the Filipino manufacturing sector, it marked a welcome shift from the subdued performance seen between March and June
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Business confidence recovered in July as firms expected demand conditions to continue improving and support further growth in production over the coming 12 months
Filipino manufacturers started the second half of the year on solid footing as growth in new orders and production in July picked up to degrees not seen since February, before the Middle East conflict broke out.
The Philippine manufacturing sector’s headline purchasing managers’ index (PMI) – a composite single-figure indicator of manufacturing performance – rose to a five-month high of 51.8 in July, up from 50.9 in June, according to the latest S&P Global PMI survey data.
A reading above 50 indicates an overall increase compared to the previous month, and below 50 an overall decrease.
READ: PH manufacturing sustains recovery in June 2026
Though the latest reading pointed to only a modest improvement in the health of the Filipino manufacturing sector, it marked a welcome shift from the subdued performance seen between March and June, S&P Global said in a statement.
The headline index has also now increased for three consecutive months and was broadly in line with the long-run average.
S&P Global said a sharp rise in new orders in part provided a boost to the headline index. Filipino manufacturers reported that stronger underlying demand and new project wins supported the latest increase in new sales. The rate of growth was the fastest since February and above the historical trend.
The strong upturn in sales then prompted goods producers across the Philippines to raise output levels at a quicker pace in July. Production growth was also the strongest for five months and exceeded the long-run average, thereby also contributing to the upward movement in the headline index.
As production requirements rose, manufacturers increased their purchasing activity in July, with the pace of expansion quickening from the previous month.
Vendor performance, however, deteriorated sharply in July after broadly stabilizing in June. The extent to which lead times worsened was the most marked since December 2024.
Firms commonly linked the latest lengthening in average lead times for inputs to the war in the Middle East and the impact on supply chain health. As a result, goods-producing firms across the country fell back on their stocks to assist with the recent upturn in new orders.
Stocks of purchases fell solidly after broadly holding steady in the previous survey period. Meanwhile, following a modest build-up of finished goods inventories in June, the latest data signaled a renewed decrease.
Subsequently, firms were able to stay on top of their workloads, as shown by a renewed fall in backlogs of work.
Employment
In terms of employment, after holding steady in the survey month prior, staffing levels fell moderately in July.
Firms attributed the fresh round of job losses to voluntary resignations and the non-replacement of leavers.
Turning to prices, July saw a renewed intensification of inflationary pressures. After adjusting for seasonality, both the input price and output charge indexes moved back above their respective long-run averages. S& P Global said qualitative evidence continued to show that the war in the Middle East was driving up costs, which firms then passed on to customers through higher charges for goods.
Business confidence recovered from June’s five-month low, as firms expected demand conditions to continue improving and support further growth in production over the coming 12 months. That said, S&P Global noted that the level of positive sentiment remained among the weakest recorded over the past year and historically subdued, with ongoing geopolitical uncertainty and its impact on prices weighing on forecasts.
