PHILIPPINE manufacturing activity accelerated sharply in August, with factory output expanding at its fastest pace in more than nine years as stronger demand and new orders gave the sector a significant boost.
The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) rose to 54.9 in August from 51.8 in July, marking the fourth consecutive month of expansion and the strongest improvement since December 2016’s 55.7.
A PMI reading above 50 indicates an expansion in manufacturing activity from the previous month, while a reading below 50 signals a contraction.
“The Filipino manufacturing sector continued to build momentum in August, moving on from the flat performance seen in the previous quarter, when activity was affected by the conflict in the Middle East,” S&P Global Market Intelligence economist Maryam Baluch said.
“Encouragingly, production rose at its fastest pace since 2016, helped by stronger demand conditions,” she added.
S&P Global said manufacturers reported a substantial increase in production during the month, with the pace of expansion accelerating noticeably from July.
Improved underlying demand and greater production efficiency were cited by surveyed firms as key factors behind the increase in output.
“New orders rose robustly in August, supported by new product and model launches, higher repeat business and a broader customer base, according to anecdotal evidence,” S&P said.
Stronger orders encouraged manufacturers to increase purchasing activity, with input purchases rising at the fastest pace in six months in August.
New export orders increased in August, in particular, marking the first improvement in international sales in six months.
Stronger manufacturing performance also translated into an improvement in employment, with factory staffing levels up for the first time in five months. The pace of job creation also reached its strongest level in 21 months.
“Firms responded by increasing both purchasing and hiring to keep up with greater production needs,” Baluch said.
Manufacturers also began rebuilding stocks of purchases, which increased for the first time since February, although the pace of accumulation was only moderate.
This happened despite a deterioration in supplier performance, which forced some manufacturers to draw down existing finished-goods inventories.
Finished-goods stocks declined for a second consecutive month, although the rate of depletion remained marginal.
Input costs, meanwhile, increased at a notably slower pace than in July, although manufacturers continued to report higher expenses for energy, raw materials and logistics.
“Likewise, output charges rose, but the rate of inflation was modest and the weakest in the current six-month sequence of inflation,” S&P said.
Manufacturers also became considerably more optimistic about the year ahead.
Business confidence surged in August to its highest level since November 2024, with companies citing expansion plans, the introduction of new product lines and expectations of stronger new orders and customer wins.
