SUMMARY: The Philippines’ manufacturing industry records its best-ever Purchasing Manager’s Index (PMI) in the last seven (7) years at 54.3 thanks to product diversification and new client acquisitions, reported the S&P Global Market Intelligence. But despite ending the previous year on a high note, the Philippines’ manufacturing index slows down in the first month of the new year, recording a 3.68% decrease from December.
“To Be a Manufacturing Powerhouse” Dream Remains Alive for the Philippines
From being on the retreats since the 1980s to experiencing a resurgence in recent years, the Philippines keeps its dream of being a manufacturing powerhouse alive.
Key manufacturing sectors, electronics, food, and chemicals, showed promise and swelled continuously in December, resulting in the Philippines having the highest purchasing manager’s index (PMI) reading among SEA countries in a report by S&P Global.
Ending the year with a PMI score of 54.3 reflects the strong manufacturing activity in the country compared to its neighboring nations.
Marcos Pitches the Philippines as a Hub for Sustainable Manufacturing
At the ASEAN Business and Investment Summit in Laos, President Marcos pitches the Philippines as a hub for smart and sustainable manufacturing in the ASEAN region. Furthermore, he emphasized the growth of the local manufacturing sector. Marcos pointed to the sustained improvement in the PMI in the face of global economic challenges.
These in his speech, he urged foreign investors to explore opportunities in industries such as green metals, battery manufacturing, energy equipment, and agribusiness.
Quarterly Performance Summary of the Philippines’ Manufacturing Industry in 2024
The Philippines’ Manufacturing Industry in Quarter 1 of 2024
The Philippines’ Gross Domestic Product (GDP) output in the first quarter of the year posted a year-on-year growth of 5.7%. According to a report by the Philippine Statistics Authority, the main contributors to the first quarter growth were Financial and Insurance activities, Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles, and Manufacturing.
Key sub-sectors that contribute to the notable growth rate displayed by the manufacturing industry include sectors like food products, computer and electronic products, chemicals, and petroleum products.
Of the five sub-sectors listed, food manufacturing came out as the most profitable and accounted for the highest share. However, in terms of trade, electronic products were the leading export goods from the Philippines.
More importantly, what identified the modest growth of the Philippines’ manufacturing industry during the first quarter of 2024 was its purchasing manager’s index (PMI) score.
What is the Purchasing Manager’s Index (PMI)?
The Purchasing Manager’s Index (PMI) is a composite index that helps analysts, investors, and business leaders understand business conditions. It is a monthly survey conducted among purchasing managers that includes weighted averages of new orders, production, employment, supplier deliveries, and inventories.
Used to determine economic growth, a PMI score of above 50% indicates that the economy is expanding, whereas a score below 50% indicates a recession.
The Philippines’ manufacturing sector posited a PMI average of 50.93 in Q1, entailing a positive economy for the first three months of 2024.
The Philippines’ Manufacturing Industry in Quarter 2 of 2024
The PSA reported a 6.3, which was then revised to 8.1%, YoY growth in the GDP for the second quarter, with major contributors being as follows:
During Q2, the PMI history average was at 51.8, which again implies a positive economy for the country. The breakdown is as follows:
In case you’re wondering why the PSA made revisions to the Reported GDP for Q2:
For Q2-2024, the revisions were made based on an approved revision policy, PSA Board Resolution No. 1, Series of 2017-053, which concerned consistency with international standard practices on national account revisions.
To see the signed resolution, click here.
The Philippines’ Manufacturing Industry in Quarter 3 of 2024
S&P Global reported that the Filipino manufacturing sector ended the third quarter on a solid note. This was primarily because of the “robust expansion in new orders” that supported greater purchasing activity. From 51.2 in July, the PMI remained consistent in the month that followed and read at 53.7 during September, which was the highest recorded ever since mid-2022. Such a PMI result was indicative of a solid improvement in the health of the Philippines’ manufacturing sector (ref).
The Philippines’ Manufacturing Industry in Quarter 4 of 2024
By the last quarter of the year, the local manufacturing sector’s PMI averaged 53.9. This is broken down into the following composite scores: October at 53.7, November at 53.8, and December at 54.3.
In the remaining three months of the year, manufacturing firms have increased production in anticipation of the demand in the coming months. Furthermore, post-production inventories have increased. On the logistics side of things, supply chains were stretched due to the shortages of raw materials as well as port congestion.
Maryam Baluch, an economist at S&P Global Market Intelligence, said:
“…adverse weather conditions resulting from the recent typhoons hitting the country and rising inflationary pressures make a difficult environment for manufacturers. Nonetheless, firms remained optimistic about future output, with hopes that improved demand trends and the upcoming election year will provide a boost to the sector.”
‘Chemical Manufacturing’ Comes Out as a Major Contributor to Economic Growth
The chemical manufacturing sector is a cornerstone of the Philippine economy, ranking among the largest manufacturing sub-sectors in the country. Its influence extends across a range of vital industries, including agriculture, automotive, cement, creative, construction, energy, health, and pharmaceuticals. As such, it plays a significant role in driving economic growth.
Furthermore, the global chemical industry is experiencing robust demand, fueled by expanding industrial activities. This surge in demand has attracted a consistent flow of foreign investment, further solidifying the sector’s stability and potential for continued expansion.
PH Manufacturing Industry 2025: Slows Down in January, reported by S&P Global
Despite the upward trajectory displayed in the previous year, the latest survey from S&P Global revealed a slight slowdown in the manufacturing sector’s PMI score of January 2025. From last year’s high of 54.3, the first month of the year recorded a score of 52.3
Regardless, new orders are reported to have kept coming in at a strong pace, with high customer demand and new customers helping boost sales.
Ultimately, this strong demand remains to be attributed to the steady output produced by the Philippines’ manufacturing industry.
