Factory output grows at slowest pace in 7 months

Manufacturing output growth fell to a seven‑month low in November, weighed down by weak domestic consumption and sluggish export demand.

Preliminary results of the Philippine Statistics Authority’s (PSA) latest Monthly Integrated Survey of Selected Industries showed factory output, as measured by the volume of production index, fell by 1.5% year on year in November, a reversal from the revised 1% growth in October.

Year on year, the decline slowed from the 4.5% drop in November 2024.

The November reading was the slowest output growth in seven months or since the 2.4% decline in April 2025.

On a monthly basis, November’s output contracted by 2.8%, reversing the 5% growth in October. Stripping out seasonality factors, it slipped by 3.5%.

Year to date, factory output fell by 0.1%, a reversal from the 0.7% growth in the same period in 2024.

PSA data showed the November manufacturing performance was mainly due to the slower month-on-month growth in food products (4.2% in November from 8.1% in October); and the decline in coke and refined petroleum products (-11.4% from -2.7%); and beverages (-2.8% from 4.9% growth).

“Manufacturing output contracted by 1.5% in November, reflecting a sharper deterioration in operating conditions as the Philippines Manufacturing Purchasing Managers’ Index (PMI) fell to 47.4 from 50.1, driven by weak domestic and export demand and typhoon‑related production disruptions,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in an e-mail.

S&P Global PMI fell to over a four-year low of 47.4 in November, a reversal from the 50.1 in October.

“Beyond these, we continue to monitor declining export orders, softer purchasing activity, thinning inventories, and early signs of labor shedding — signals consistent with a sector adjusting to both global headwinds and domestic supply constraints,” added Mr. Asuncion.

Nicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co., said the manufacturing performance reflected the slowdown in economic activity in the third quarter.

“In particular, softer household consumption may have weighed on volume of production,” he said in an e-mail.

In the third quarter, GDP grew by 4%, the slowest in over four years. This brought the nine-month average growth to 5%, below the government’s 5.5%-6.5% target.

Philippine Chamber of Commerce and Industry Chairman Sergio R. Ortiz-Luis, Jr. said that the decline in November came after most orders were frontloaded in the first nine months of 2025.

“Actually, both local and export production were fast-tracked in the first three quarters of the year… There was front-loading for year-end deliveries. So, production tapered down in the fourth quarter,” said Mr. Luis-Ortiz in mixed English and Tagalog in a phone call.

Capital utilization averaged 77.4% in November, slightly lower than October’s 77.6%. All sectors have reached an average capacity utilization rate of more than 60% during the month.

Going forward, Mr. Asuncion anticipates a “modest” improvement in December and “gradual” recovery through 2026. 

“Our view is that while November’s slump reflects temporary disruptions and cyclical demand softness, forward sentiment remains constructive. Manufacturers posted their strongest optimism since November 2024, and with domestic demand expected to firm up alongside an eventual BSP (Bangko Sentral ng Pilipinas) easing cycle… consistent with medium‑term projections that see manufacturing output trending higher toward 2026,” said Mr. Asuncion.

Mr. Mapa said a gradual recovering in manufacturing is likely as “inventories decline and demand returns over the next few months.”

“Manufacturing looks like to grow especially in export, but not as fast as we would like to, it will continue to grow but still we are left behind by our neighbors due to weak demand,” said Mr. Ortiz-Luis. — Lourdes O. Pilar