Philippine manufacturing activity surged to a nine-month high in January as a sharp increase in new orders pushed production back into expansion territory, though business confidence slumped to near-record lows over global economic uncertainty.
The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) climbed to 52.9 in January from 50.2 in December. The reading moved further above the 50.0 threshold that separates growth from contraction, marking a significant shift in momentum after a sluggish performance in the second half of 2025.
“After a prolonged period of subdued growth in the second half of 2025, the first PMI data release for 2026 points to a marked shift in momentum. New orders registered a strong and accelerated uptick, supported in part by a renewed rise in export demand. As a result, production returned to expansion territory for the first time in five months,” S&P Global Market Intelligence economist Maryam Baluch said.
The upturn was led by a strong acceleration in new orders, supported by a renewed appetite for exports. This prompted manufacturers to increase production for the first time in five months. To meet these requirements, firms raised purchasing activity at the fastest pace in 12 months and resumed hiring after two months of modest job cuts.
Despite the immediate boost in activity, the outlook for the coming year darkened. Business confidence fell to its second-lowest level since the survey began in 2016, trailing only the record low seen in March 2020 at the start of the pandemic.
Baluch said the hesitancy among manufacturers reflects concerns regarding the sustainability of the current recovery and lingering weakness in key export markets.
Cost pressures remained relatively stable at the start of the year. While input prices rose due to higher raw material costs, the rate of inflation was marginal and unchanged from December. Manufacturers raised their selling prices only slightly, with both input and output price growth remaining below historical averages.
The report also noted continued strain on supply chains, with delivery times lengthening more significantly than in the previous month. Manufacturers responded by increasing their stocks of both raw materials and finished goods to hedge against potential disruptions.
The increase in staffing levels, while slight, was the quickest recorded since June 2025 and allowed companies to reduce their outstanding backlogs of work for the first time in three months.
