The manufacturing sector slackened in January to a five-month low after a seasonal high in December, a survey by S&P Global showed in a report released on Monday.
The headline S&P Global Philippines Manufacturing Purchasing Managers’ Index, a composite single-figure indicator of manufacturing performance, stood at 52.3 in January, down from December’s 54.3.
New orders and output continued to rise, although the growth rates moderated from the recent highs in December.
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said the manufacturing performance in January partly reflected the seasonal decrease in demand and production activities upon crossing the new year after the Christmas holiday season.
“Still relatively higher prices, interest rates, and weaker peso exchange rate vs. the US dollar since 2022 also partly weighed on demand and production and manufacturing activities,” Ricafort said.
The full implementation of the ban on Philippine Offshore Gaming Operators (POGOs) by the end of 2024 also adversely affected some manufacturers, especially those that have POGO customers.
“Possible Trump protectionist measures such as higher US import tariffs and the resulting trade war also led to some cautiousness, especially for exports market and external trade, adopting some wait-and-see stance for some manufacturers and exporters, in terms of their production, stockpiling and inventory management,” Ricafort said.
“Relatively softer economic data in China, which is the world’s second largest economy and among the biggest trading partners of the Philippines and other Asian and Asean countries could have also partly weighed on some local manufacturing and production activities,” he added.
Maryam Baluch, economist at S&P Global Market Intelligence, said in the report the election year is likely to provide a general boost to the manufacturing sector.
“We could see 2025 shaping up to be another strong year of growth for the Philippines manufacturing sector with industrial production growth forecasted at 3.9 percent in 2025, up from 2.4 percent in 2024. In fact, the anticipation of greater demand has already prompted goods producers to increase their inventory levels,” Baluch said.