Factory activity back to expansion mode

MANILA, Philippines — The Philippine manufacturing sector returned to expansion territory in October, reflecting stable operating conditions, despite declines in new orders and output.

S&P Global said in a statement yesterday that the Philippines’ manufacturing purchasing managers’ index (PMI) stood at 50.1 in October, up slightly from the previous month’s 49.9.

The PMI, which is used to track manufacturing performance, is generated from a survey of around 400 manufacturers and takes into account new orders, output, employment, suppliers’ delivery times and stocks of purchases.

An above-50 PMI reading indicates an increase compared to the previous month, while a reading below 50 denotes a contraction.

S&P Global said the latest PMI reading masked declines in both output and new orders.

Manufacturing firms attributed the lower output to adverse weather conditions and the end-of-life status for certain products.

Regarding the decline in new orders, manufacturers cited weak demand, with some clients putting orders on hold.

Amid lower orders, manufacturing firms also reduced their purchases.

Despite a decrease in buying activity, delivery times for inputs continued to lengthen in October, reaching their longest in three months.

“On a more positive note, manufacturers grew more optimistic about their growth prospects for output in the coming year,” S&P Global Market Intelligence economist Maryam Baluch said.

She said that manufacturers also hired more workers, with the latest increase in staff count being the highest in three months.

When it comes to pricing, she said cost pressures remain subdued, providing manufacturers with flexibility in setting prices for their products.

To stimulate demand, some opted to bring down their selling prices.

“The sector has now remained in sluggish territory for most of the second half of 2025 so far. Whether it can see a notable recovery in performance in the coming months will depend greatly on efforts to stimulate consumer demand,” Baluch said.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said in an email that, going forward, the probe into flood control corruption allegations, which could expand to other infrastructure projects, may impact the overall economy.

He said this “could also slow down local manufacturing activities, particularly those that are part of the supply chains or value chains of the various infrastructure projects amid greater scrutiny.“

On the other hand, he said further cuts in local policy rates and US Fed rates would help reduce borrowing costs and drive growth in local manufacturing.