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The Philippine manufacturing sector was relatively subdued at the start of the second semester of 2025
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Output and new orders continued to rise, but at modest and historically muted rates, based on the latest S&P Global Philippines Manufacturing PMI data
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Sentiment regarding the year-ahead outlook improved to a four-month high, with companies’ hoping for growth in production levels
The Philippine manufacturing sector was relatively subdued at the start of the second semester of 2025, based on the latest S&P Global Philippines Manufacturing PMI data. Output and new orders continued to rise, but at modest and historically muted rates.
Growth in hiring and purchasing activity lost momentum, while inflationary pressures were subdued.
Sentiment regarding the year-ahead outlook improved to a four-month high, with companies’ hoping for growth in production levels.
For the second straight month, the headline S&P Global Philippines Manufacturing PMI – a composite single figure indicator of manufacturing performance – was at 50.9 in July, from 50.7 in June.
READ: PH manufacturing returns to growth in June
Maryam Baluch, Economist at S&P Global Market Intelligence, in a statement, said: “While signalling further improvement across the Filipino manufacturing sector, PMI data from the opening month of the third quarter, still painted a picture of a muted overall performance.”
Despite signalling only a slight improvement in the health of the country’s manufacturing sector, a return to growth momentum is expected, as indicated by the latest improvement in operating conditions being the strongest since April.
Anecdotal evidence highlighted that an increase in incoming orders boosted production. Output was also partly directed to a renewed rise in finished goods inventories, “which were accumulated in anticipation of future sales, particularly in relation to front-loading orders from the US ahead of the impending tariff hikes,” according to S&P.
Post-production inventories expanded at the strongest pace in eight months, S&P added.
Demand for locally manufactured goods improved for a fourth consecutive month in July, spurring a further rise in new orders.
Foreign sales also contributed to growth in total new work, but only to a fractional degree.
New export orders rose for the first time in five months. Nonetheless, the rate of increase for overall new orders softened slightly. S&P pointed out that the latest uptick was modest and weaker than the long-run series average.
The softening sales landscape was reflected in firms’ purchasing and hiring decisions. Both measures recorded a slowdown in the pace of growth over the month. The rates of expansion observed were broadly similar and only marginal overall. Turning to prices, inflationary pressures across the Philippine manufacturing sector remained subdued in July. Moreover, the rate of input price inflation was the slowest in the current 14-month period of rising cost burdens.
Where firms reported higher operating expenses, this was linked to higher prices for raw materials. However, strategic efforts in bulk buying enabled other firms to spread their costs. “Inflationary pressures were notably muted, providing a silver lining to the otherwise cautious landscape. At the same time, optimism regarding future production levels surged to a four-month high, as firms strategically prepared for anticipated demand. While challenges remain, growing positive sentiment hints at a more hopeful outlook for the sector,” said Baluch
Output and new orders continued to rise, but paces of expansion remained historically subdued. Purchasing and employment also rose at slower rates, reflecting underlying caution among manufacturers.
