Manufacturing PMI falls in Sept.

Amid rainy weather, higher tariffs, and an import ban, the Philippine manufacturing sector slipped back into contraction in September as its purchasing managers' index (PMI) fell to 49.9, the lowest in six months and only the third decline in more than four years.

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S&P Global Market Intelligence's Philippines manufacturing PMI for September 2025, released on Wednesday, Oct. 1, marked the second straight monthly drop after 50.8 in August and was weaker than the 53.7 recorded in September 2024. A score below 50 signals contraction, while above 50 indicates expansion.

The report noted that the drop in September was the second-steepest recorded since the beginning of the year; the previous decline was a deeper 49.4 last March.

"Firms responded with a marginal increase in selling prices. Anecdotal evidence signaled that rising material prices were the primary factor behind heightened costs and increased charges," it added.

While the contraction represents a slight weakening of the manufacturing sector, S&P Global emphasized that "this was only the third time in just over four years where the headline index has been in contraction territory."

The survey showed that sales declined for the first time since March, with businesses citing fewer customers. "Reduced sales volumes led Filipino manufacturers to scale back production at the end of the third quarter, which ended a three-month sequence of expansion," the report said. "As demand weakness, panelists indicated that poor weather conditions and import restrictions on rice had negatively impacted output."

Despite slower demand, manufacturers continued to increase input purchases, helping build stocks of raw materials. Foreign orders continued to improve, but the downturn was largely concentrated in the domestic market. Post-production inventories declined due to lower output and efforts to reduce backlogs, which dropped for the first time since April.

The report showed that the cost burden eased slightly from August, though the pace of increase remained among the highest recorded in 2025, compared with a muted rise in factory-gate prices.