The Philippines’ manufacturing output deteriorated in March, falling below the neutral 50 level in the benchmark index for the first time in 19 months amid fresh contractions recorded in output and new orders, S&P Global said in its latest report.
The S&P Global Philippines Manufacturing Purchasing Managers’ Index, which is a composite single-figure indicator of manufacturing performance, showed the country’s factory output falling to 49.4 in March, or below the benchmark for the first time since it slipped to 49.7 in August 2023. The index level above 50 indicates an expansion in manufacturing.
The index in March 2025 marks a third-straight month decline, although not necessarily below 50, for the Philippines. For further comparison, the country’s manufacturing index in February already showed a dip from the preceding month to 51.
“Panelists noted that growing competition and fewer clients led to a reduction in new orders, with output scaled back as a result,” Maryam Baluch, economist at S&P Global Market Intelligence, said in the report.
“Growth in new export orders seen previously also dissipated, with March data signaling a marginal drop in new business from overseas,” Baluch added.
Upbeat for the year ahead
The report, however, said manufacturing forecasts for the year ahead for production remained upbeat.
The level of sentiment ticked up a four-month high, with firms hopeful that demand trends will improve over the coming 12 months.
“Optimism was reflected in firms’ decisions to maintain their purchasing activity and build stocks,” Baluch said.
“At the same time, inflationary pressures remained relatively contained and
subdued in the context of the series history,” Baluch added.
Analyst’s take
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said in an email the contraction in the manufacturing sector in March still partly reflected the seasonal slowdown in demand and production activities upon crossing the new year.
Ricafort said it also factored in the “cautious mode” amid US President Donald Trump’s higher US import tariffs and other protectionist policies that could slow down world economic growth, especially in terms of slower global trade, investments, employment and other business activities.
“Nonetheless, the local manufacturing PMI just came from and (was) still near expansion mode for the 18 straight months or 1.5 years until February 2025 (which) is still a good signal as (it is) one of the major sources of economic growth,” Ricafort said.
