The Philippine manufacturing sector kicked off 2025 with robust demand growth despite a slowdown in output expansion from December's highs. The Purchasing Managers' Index (PMI) stood at 52.3 in January, indicating continued growth but at a five-month low. Experts attribute the positive outlook to strong client demand and rising business activity in anticipation of the election year.
The Philippines manufacturing sector commenced 2025 with robust demand growth, although output expansion moderated from the peaks registered in December, as per S&P Global's latest Philippines Manufacturing PMI report. The purchasing managers' index ( PMI ) stood at 52.3 in January, down from December's 32-month high of 54.3. While this latest reading marked a five-month low, it remained above the 50.0 threshold that distinguishes expansion from contraction.
S&P Global stated, 'In January, demand for Filipino goods continued to improve, albeit at a slightly slower pace compared to the recent peak observed in December.' 'Nevertheless, the rate of expansion in intakes of new orders remained historically strong, as firms reported that robust client demand and the acquisition of new customers fueled increased sales,' it added. Manufacturing output expanded for the tenth consecutive month, albeit at a slower rate, the second-weakest in nearly a year.S&P Global indicated that manufacturers augmented purchasing activity in anticipation of stronger sales ahead. Both raw material and finished goods inventories rose at historically robust rates, rebounding from December's sharp stock decline. However, supply chain challenges persisted, with delivery delays attributed to truck shortages and port congestion. Notably, the decline in vendor performance was the least pronounced in five months, suggesting some amelioration in supply conditions. On the pricing front, input costs increased at their weakest pace in five months, aided by easing cost pressures for certain raw materials. Nonetheless, transportation costs remained a concern, contributing to higher overall expenses. Despite this, manufacturers opted to pass on these costs to customers, leading to a slight acceleration in output price inflation compared to December. 'If demand trends persist on their current trajectory, then employment growth could be on the horizon in the coming months,' observed S&P Global economist Maryam Baluch. Employment levels remained unchanged for the second consecutive month. While some firms recruited additional workers in response to higher sales, resignations offset these gains, resulting in no overall improvement in the labor market. Looking ahead, firms expressed optimism about future output growth, driven by expectations of rising demand and increased business activity in the lead-up to the election year. 'We could witness 2025 emerging as another robust year of growth for the Philippines manufacturing sector, with industrial production growth projected at 3.9 percent in 2025, up from 2.4 percent in 2024,' stated Baluch. 'In fact, the anticipation of greater demand has already prompted goods producers to augment their inventory levels.
Manufacturing Philippines PMI Demand Output Supply Chain Employment Inflation Economic Growth
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