PH factory activity ‘moderated’ in Feb 2025
Philippine factory activity expanded at a softer pace for the second straight month in February after the usual boost in demand during the holiday season faded, although increasing backlogs had triggered a fresh rise in employment.
A survey of around 400 manufacturers showed the Philippines’ Purchasing Managers’ Index (PMI)—a gauge of the health of the manufacturing sector— stood at 51 in February, S&P Global reported on Monday.
While the latest reading settled above the 50-threshold separating expansion from decline, the February PMI was down from the 52.3 recorded in January as growth in both output and new orders slowed.
Demand
In a commentary, Maryam Baluch, economist at S&P Global Market Intelligence, said the end of the Christmas shopping season put the brakes on strong production activity that was seen at the close of 2024.
“Robust growth observed from the end of the previous year into the beginning of this year waned in February,” Baluch said.
Survey data showed the expansion in new orders—including demand from overseas markets—was the weakest in seven months in February. That, in turn, weighed on production, with output growth posting the slowest pace of increase since July 2024.
Employment up
In response to easing manufacturing activity, Filipino producers had to temper their input buying, which grew at the weakest clip in 15 months. Production costs likewise softened in February, resulting in a “fractional” increase in selling prices.
But despite the moderation in the overall manufacturing activity, S&P said demand conditions remained relatively strong, which put pressure on capacity.
Companies had reported an increase in backlogs of work for the first time in five months. To fulfill all orders, S&P said local producers had to use their inventories, resulting in a decline in their input stock holdings, a first in three months.
Firms also had to expand their headcount to meet the demand. While the increase in hiring was marginal, S&P said the rise in employment snapped two months of flattish staffing numbers.
Moving forward, S&P’s Baluch said further rate cuts to the central bank’s policy rate could help support local production activity.
“Meanwhile, inflationary pressures eased, thus suggesting that the central bank will continue to proceed with a loosening of its monetary policy,” she said.
“This could in turn boost somewhat weakened business confidence and support further new order growth,” she added.
