The Philippine manufacturing sector opened 2026 with renewed momentum, as the Purchasing Managers’ Index signaled a broad-based improvement in operating conditions in January, according to S&P Global.
The headline PMI climbed to 52.9, a nine-month high, from 50.2 in December, firmly back in expansion territory and pointing to a strengthening industrial cycle.
The upturn was led by a sharp acceleration in new orders, reflecting firmer domestic demand and a tentative recovery in external markets. Production expanded for the first time in five months, broadly matching the pace of order growth, as factories responded to improved sales pipelines.
Export demand returned to expansion, albeit modestly, marking the first increase in new foreign orders since September.
Higher output requirements encouraged manufacturers to add workers.
Employment rose for the first time in three months, posting its fastest increase since June, though overall job creation remained limited. Increased staffing helped firms trim outstanding workloads, with backlogs contracting slightly and ending a short period of accumulation.
Purchasing activity strengthened alongside production, recording its fastest growth in a year. Firms increased input buying and rebuilt inventories, with both pre- and post-production stocks rising, signaling greater confidence in near-term demand.
Cost pressures, however, remained contained. Input prices rose mainly due to higher raw material costs, but inflation stayed near December’s recent low and below long-run averages.
Output price increases were similarly muted. Supply chain frictions persisted, with delivery times lengthening more than in the previous month.
Despite stronger current conditions, business sentiment weakened notably. Future output expectations fell to one of the lowest levels on record, reflecting lingering uncertainty over global growth and demand prospects in key export markets.
This divergence underscores risks facing the sector ahead.
