PH factory activity contracts for first time in 5 months

Philippine manufacturing returned to negative territory in September, posting its first contraction in five months as weaker demand weighed on output and new orders, results of the latest S&P Global survey released Thursday showed.

The headline S&P Global Philippines Manufacturing PMI stood at 49.6 in September, down from 54.9 in August, and below the 50.0 threshold that separates expansion and contraction for the first time since the 48.3 in April. It is also lower than the 49.9 recorded in September 2025.

“Filipino manufacturers reported a notable impact from high oil prices, strong international competition, and weak demand during September,” S&P Global Market Intelligence principal economist Siân Jones said in an accompanying commentary.

Output fell into negative territory, the first in nine months and the sharpest since November 2025, due to a decrease in new orders as higher prices deterred client purchases amid strong competition. This led to a reduction in backlogs, which posted the biggest drop since April.

“Firms also signaled moves into retrenchment made via a fresh decline in input buying and a running down of inventories,” Jones said, noting the fall in production requirements.

Operating expenses were also reported higher during the month, linked to the depreciation of the Philippine peso against the US dollar and higher oil prices, bringing selling prices even higher.

The Philippine peso traded at the P62:$1 level for the whole month of September, and hit a fresh all-time low of P62.86:$1 on September 14, 2026, the 25th record low so far this year.

Local fuel retailers also implemented major pump price hikes in three of the five weeks in September, reflecting global price movements driven by the geopolitical conflict in the Middle East.

“Manufacturing firms were less certain in the year-ahead outlook, meanwhile, due to concerns regarding pricing power against international competition. The viability of continuing to absorb hikes in costs will be an important consideration in the coming months in bids to drive customer demand,” Jones said. —AOL, GMA News