Philippine manufacturing returned to growth in May, snapping a brief downturn as stronger domestic demand fueled production and new orders, according to the latest S&P Global Philippines Manufacturing PMI survey.
The headline Purchasing Managers’ Index (PMI) climbed to 50.8 in May from 48.3 in April, crossing back above the 50-point threshold that separates expansion from contraction. The latest reading marked the fifth month of growth in the past six months, although S&P Global said the pace of expansion remained relatively modest by historical standards.
The turnaround was driven by a rebound in new orders after April’s steep decline. Manufacturers reported stronger customer demand and an increase in new client acquisitions, helping revive business activity across the sector.
Growth, however, was largely anchored on the domestic market. Export demand remained under pressure, with new overseas orders falling at the fastest rate since July 2020, highlighting persistent weakness in global demand.
Rising orders prompted firms to boost output at the quickest pace in three months. But manufacturers continued to grapple with mounting cost pressures and supply-chain challenges.
S&P Global said supplier delivery times lengthened sharply due to shipping delays and companies’ efforts to consolidate orders to contain expenses. Firms also pointed to the conflict in the Middle East as a key factor driving higher fuel and raw material costs, pushing input price inflation to its highest level since August 2022.
While manufacturers passed on part of the higher costs to customers through increased selling prices, the pace of price hikes eased from April’s record levels.
Despite the improvement in output and orders, companies remained cautious, trimming employment and purchasing activity while drawing down inventories to support production.
Sentiment has brightened considerably. Business confidence rose to its highest level in 18 months as manufacturers expressed optimism that stronger demand will sustain the sector’s recovery through the rest of the year.
