THE health of the Philippines’ manufacturing sector deteriorated in April as weakening demand and rising costs led to reduced factory activity.
The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) dropped to 48.3 in April from 51.3 in March, slipping below the 50.0 threshold that separates expansion from contraction.
It marked the first deterioration in operating conditions since November 2025, when the index stood at 47.4.
The decline was driven largely by a sharp fall in new orders, which contracted for the first time in five months and at the fastest pace since August 2021.
Firms also reported weaker export demand, with new export orders declining at the steepest rate since mid-2020 amid disrupted trade routes and shipment delays.
“The Filipino manufacturing sector started the second quarter of 2026 with a renewed worsening of operating conditions as the headline index fell below the neutral 50.0 reading for the first time in five months,” S&P Global Market Intelligence economist Maryam Baluch said.
With demand softening, S&P said that production growth stalled in April. Output levels posted a neutral reading, a reversal from the expansion recorded in the first quarter of the year.
Manufacturers also scaled back purchasing activity for a second straight month as higher input costs and weaker sales reduced the need for additional inputs.
Cost pressures intensified in April, with input price inflation accelerating to its fastest since December 2022. Companies attributed higher operating expenses to rising energy and shipping costs, which were linked to the war in the Middle East.
These higher costs were passed on to customers as firms raised selling prices at the quickest pace in 41 months.
In response to softer demand and elevated costs, manufacturers also reduced staffing levels in April, marking the first instance of job shedding so far this year.
At the same time, firms relied more heavily on existing inventories, leading to a sharp decline in both pre-production stocks and finished goods.
Supply chain conditions likewise deteriorated, with vendor delivery times lengthening further due to logistical disruptions tied to the Middle East conflict.
Despite the current downturn, the outlook among manufacturers remained optimistic. Business confidence for the next 12 months rose to a 17-month high, supported by expectations of stronger demand and a growing client base.
“[M]anufacturing firms in the Philippines expect to shake off current woes, as confidence for the year ahead rose to a 17-month high,” Baluch said.
“Positive sentiment was underpinned by hopes of a growing client base and improved underlying demand trends, according to anecdotal evidence.”
