Manufacturing growth slows in Feb.

Philippine manufacturing activity in February expanded at its slowest pace in 11 months amid softer growth in orders and output, data from S&P Global showed.   

The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) stood at 51 in February, easing from the 52.3 in January.

This was the lowest PMI reading in 11 months or since the 50.9 reading in March 2024. February also marked the second straight month of slowing growth.

A PMI reading above 50 denotes better operating conditions than in the preceding month, while a reading below 50 shows a deterioration.

“Robust growth observed from the end of the previous year into the beginning of this year waned in February, as the latest survey data indicated slower expansions in output and new orders,” Maryam Baluch, economist at S&P Global Market Intelligence, said in a statement on Monday.

The Philippines posted the second-fastest PMI reading among six Association of Southeast Asian Nations (ASEAN) member countries, after Indonesia (53.6) and ahead of Thailand (50.6).

Malaysia (49.7), Vietnam (49.2), and Myanmar (48.5) all posted a contraction in factory activity in February.

In its report, S&P Global said the manufacturing conditions in the Philippines continued to improve in February, although this was the “least marked in nearly a year.”

“However, underlying data showed a mixed picture, with the sector showing a slight cooldown as growth in new orders and output moderated on the month, leading to a softer increase in purchasing activity,” it said.

S&P Global said growth in new orders moderated in February after the robust increase seen in the fourth quarter of 2024. New factory orders rose at the slowest pace in seven months, while growth in new export orders was subdued.

Production growth also moderated in February, with output growth at the weakest since July 2024.

As demand cooled, manufacturers tempered their purchasing activity. February saw the slowest expansion in the last 15 months.

S&P Global noted manufacturing firms reported a fresh rise in backlog of work for the first time in five months.

“Although the rate of accumulation in work-in-hand was modest, it was the most pronounced seen in nearly two years. Consequently, companies utilized their inventories to meet order requirements and thereby reduced their input stock holdings, signifying the first decrease in three months,” it said.

Ms. Baluch noted that employment levels went up for the first time in three months, “with companies challenged to meet sustained demand improvements.”

S&P Global said price pressures further eased in February.

“Although material shortages and transportation costs continued to drive up input prices, the rate of increase was the slowest in the current nine-month sequence of inflation,” it said.

Output prices for Philippine-made goods inched up at the softest pace in 10 months, it added.

“Inflationary pressures eased, thus suggesting that the central bank will continue to proceed with a loosening of its monetary policy. This could in turn boost somewhat weakened business confidence and support further new order growth,” Ms. Baluch said.

The Bangko Sentral ng Pilipinas (BSP) left the benchmark rate unchanged at 5.75% at its Feb. 13 meeting. BSP Governor Eli M. Remolona, Jr. has said the central bank is still in its easing cycle and signaled the possibility of up to 50 basis points worth of reductions this year.

The Monetary Board’s next rate-setting meeting is on April 3.

S&P said manufacturers maintained a positive outlook for production in the coming year, but the degree of confidence fell to a 10-month low.

In an e-mail, Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said the Philippines was the only country in ASEAN that “suffered a loss in momentum” in February.

“[The Philippines] PMI softened for a second straight month to an 11-month low of 51.0, now a far cry from its recent high of 54.3 in December,” he said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the PMI reading reflects the slowdown in demand after the holiday season.

“Furthermore, uncertainties on Trump’s higher US import tariffs and other protectionist policies since his inauguration also a drag on global investments and international trade, including those in the Philippines,” he said.

“However, offsetting positive factor would be election-related spending, the May 12, 2025 midterm elections that could lead to increased spending by the government for various projects, especially infrastructure and other programs before the election ban,” Mr. Ricafort added. – Aubrey Rose A. Inosante, Reporter