The latest Purchasing Managers’ Index (PMI) shows a decline in Philippine manufacturing activity, but the sector is still growing.
This signals a slowdown for the manufacturing industry, but insiders are staying optimistic.
The PMI is a key indicator that measures the health of the manufacturing sector. A PMI above 50 indicates growth, while a score below 50 signals contraction. A February 5 report from S&P Global tracks new orders, production, and business confidence to assess factory performance.
According to the data, the Philippines’ manufacturing PMI dropped from 54.3 in December 2024 to 52.3 in January 2025, an indication that production is still expanding but at a slower pace.
While the Philippine PMI remains above 50, the decline suggests that manufacturers are scaling back production compared to December. Over the past year, the sector showed strong growth, with the PMI peaking at 54.3 in December.
However, weaker demand and economic uncertainty in January prompted businesses to slow down output.
The slowdown in manufacturing growth has led to stagnant employment, as companies balance new hires against resignations but with no net job increase. While overall inflation remained at 2.9% in January 2025, food prices rose, with vegetable inflation reaching 4%, prompting the government to declare a food security emergency due to rising rice costs.
Despite these challenges, businesses remain optimistic, as a PMI above 50 still signals expansion. Firms expect to adjust to shifting demand, which could lead to stronger growth later in 2025.
When compared to other ASEAN countries, the Philippines is still performing well. Indonesia also experienced expansion with a PMI of 51.9, while Thailand (49.6), Vietnam (48.9), Malaysia (48.7), and Myanmar (47.4) saw contractions, indicating that their manufacturing sectors shrank. The overall ASEAN PMI stood at 50.4, showing that regional manufacturing is barely growing.
Looking ahead, experts predict that the Philippine manufacturing sector will continue expanding in 2025, albeit at a steadier pace. Businesses are expected to adjust to shifting demand, and if economic conditions improve, manufacturing growth could accelerate again.
While short-term challenges persist, the long-term outlook for the industry remains positive.
