Philippine manufacturing activity contracts further in October as demand weakens

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Philippine manufacturing contracts October

Highlights

S&P Global reports the Philippines Manufacturing PMI fell to 49.1 in October from 49.6 in September, marking a six-month low and ongoing contraction.
Purchasing activity fell at the fastest rate in 11 months and employment declined for a second month as weak demand and softening export orders persisted.
Input cost inflation eased to an eight-month low in October, and business confidence rebounded to near two-year highs on expectations of improved demand and project pipeline.

October PMI decline reflects softer orders and output

As reported by BusinessWorld Online, citing S&P Global, the Philippines Manufacturing Purchasing Managers’ Index fell to 49.1 in October from 49.6 in September, marking a further deterioration in operating conditions and the weakest reading in six months.

A PMI reading below 50 signals worsening conditions from the previous month, while a figure above 50 indicates improvement. October’s result extends the sector’s contraction as weak demand continues to weigh on output and new orders.

S&P Global Market Intelligence Principal Economist Siân Jones said declines in output and new orders remain modest, but sharper cuts in purchasing activity and additional job losses show manufacturers are staying cautious amid subdued demand.

S&P Global said output declines ease in October, but the contraction in new orders deepens. Some firms cite weak demand and hot weather linked to the current El Niño, while export orders also remain in contraction although the pace of decline softens.

Cost pressures ease as confidence rebounds

Manufacturers cut purchasing activity at the fastest pace in 11 months as production requirements fall. Employment also declines for a second consecutive month, with some firms attributing lower headcount to resignations.

Price pressures ease in October, with input costs rising at the slowest pace in eight months. That may offer some relief to producers even as overall operating conditions remain weak.

Despite the softer PMI reading, business confidence rebounds to a near two-year high. Firms expect better demand, new projects and additional customers to support output growth over the next year.

Our earlier article on the Philippines’ planned sovereign bond market reforms explained how the new pricing convention and expected index inclusion could improve liquidity and broaden foreign participation in peso government debt. It also noted that cheaper funding and stronger capital-market activity won’t automatically translate into factory investment, exports, or productivity unless fiscal credibility holds and wider structural constraints—such as high issuance costs, shallow corporate bond markets, and persistent infrastructure and governance gaps—are addressed.

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