Local manufacturers’ pricing power dips

Factory-gate prices remained in the red in May 2025, mainly amid a faster decline in the manufacturing sector, according to the Philippine Statistics Authority (PSA).

The PSA said this was particularly due to slower growth rate in producer prices of computer, electronic and optical products.

This is from the latest update on the Producer Price Index (PPI), which measures the changes in the producer price of key commodities produced by 22 industries of the Philippine manufacturing sector.

PSA data showed that the year-on-year change in the index was pegged at -0.4 percent in May. Last April, the index recorded a -0.001-percent decrease.

Before that, PPI growth was in the positive zone for three months, from January to March.

Over the past 12 months, the change in the PPI bottomed at -1.4 percent last September and peaked at 1 percent last February.

In May, the prices in the subgroup of computer, electronic and optical products retreated by 2.1 percent. This went faster, coming from a 1.3-percent decrease in April.

“The manufacture of computer, electronic and optical products contributed 34.3 percent to the faster decline in the annual growth rate of PPI for manufacturing in May 2025,” the PSA said.

“Among the 22 industry divisions for manufacturing, manufacture of computer, electronic and optical products has the second-highest weight in the computation of PPI,” it added.

Decreases in prices of transport equipment and of basic metals also contributed to the decline in the PPI.

This comes as the output and job market for the Philippine manufacturing sector “broadly stall(ed), retreating toward the neutral 50-mark.

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Based on a report from S&P Global, the Philippines PMI, or purchasing managers index read at 50.1 in May from 53 in April.

A PMI—which is based on a monthly survey of managers—of above 50 means an overall increase (more positive responses than negative), while less than 50 means an overall decrease (more negative answers than positive).

Maryam Baluch, economist at S&P Global Market Intelligence, said that while new orders continued to increase, they did so at a slower pace and were overshadowed by contractions in other areas.

“Notably, output, employment, and the inventories of both purchases and finished goods all experienced fresh declines,” Baluch said.

“The situation was further exacerbated by a deteriorating demand from foreign markets, with May witnessing a sharper drop in new export orders,” she added. “As global trade tensions escalate, the outlook for overseas demand appears increasingly precarious.”