After months of pressure and uncertainty, Philippine manufacturing finally caught its breath in December 2025.
Factory activity returned to expansion, signaling a modest but welcome improvement in the sector’s health after suffering its sharpest contraction in four years just a month earlier, according to a survey released Friday by S&P Global.
The Philippines Manufacturing Purchasing Managers’ Index (PMI) climbed to 50.2 in December, crossing the crucial 50.0 mark that separates growth from contraction. This was a clear rebound from 47.4 in November, a level not seen since August 2021.
For manufacturers, it was a small step forward — but an important one.
“December PMI data signalled a slight improvement in operating conditions in the Filipino manufacturing sector,” said Maryam Baluch of S&P Global Market Intelligence. “It’s an encouraging move from the solid deterioration seen in the month prior.”
One of the biggest signs of recovery came from new orders.
For the first time since August, order volumes grew, ending a three-month slump. The increase was also the strongest since April, giving factories renewed momentum.
“New order volumes rose for the first time in four months,” Baluch noted. “This helped partly ease the ongoing downturn in production.”
With demand showing signs of life, companies responded.
Purchasing activity increased for the first time since September and grew at its fastest pace since August. This allowed firms to better manage inventories, keeping pre-production stocks steady while finished goods inventories rose.
Manufacturers also began building up post-production inventories, anticipating stronger demand ahead. Many expect output to increase through 2026 — though optimism dipped slightly from the 12-month high recorded in November.
Still, the recovery remains fragile.
“The improvement was tepid across the sector,” Baluch cautioned. “Its sustainability will largely depend on whether demand can be maintained and further strengthened.”
Another challenge looms beyond local shores.
Exports continue to weigh heavily on the sector, with weak external demand limiting broader expansion. For now, manufacturing growth is being driven mainly by domestic demand, while overseas markets offer little support.
The PMI survey, which covers around 400 manufacturers, was conducted in the second half of December and measures trends in new orders, output, employment, supplier delivery times, and inventory levels.
Official government data will soon provide another picture of the sector’s performance. The Philippine Statistics Authority is set to release its December manufacturing figures on February 6, 2026.
For now, December’s numbers offer something manufacturers haven’t felt in months — a cautious sense of relief, and a reason to hope.
