Manufacturing relapse adds to growth concerns
From AB Capital's The Opening Bell: Three Moves
Event
Philippine manufacturing purchasing managers' index (PMI) fell sharply to 49.6 in September from 54.9 in August, returning to contraction for the first time since April. Output, new orders and employment all weakened, while export demand also declined, pointing to a broad loss of manufacturing momentum entering 4Q26.
View
We think the more concerning signal is that softer demand is occurring alongside continued pricing pressure. Manufacturers raised selling prices faster despite slower input-cost inflation, suggesting firms are still trying to recover higher oil, logistics and foreign exchange (FX)-related expenses even as customer demand weakens.
Catalyst
The 5.3-point monthly PMI decline puts the Philippines 2.5 points below the ASEAN manufacturing average of 52.1. A rebound in orders, lower oil prices and peso stabilization could restore expansion, while prolonged weakness would add downside risk to 4Q26 growth, employment and private investment.
Action
In our view, the data reinforce a cautious stance on domestic cyclicals and manufacturing-linked industrial exposure. The combination of weaker activity and sticky selling prices also complicates the Bangko Sentral ng Pilipinas (BSP) outlook, since softer growth argues for restraint while persistent cost pass-through keeps the threshold for easing relatively high.
Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.
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