Activity in the Philippines’ manufacturing sector continued to expand in August, but increased output and growth in new orders and new orders reached the slowest rate in two months as U.S. tariffs grew.
S&P Global Philippines Manufacturing Purchasing Managers Index (PMI) in 50.8 August, from 50.9 in July, easy.
This is the lowest PMI reading since June 50.7 reading.
PMI readings exceeding 50 indicate better operating conditions than last month, while readings below 50 show deterioration.
“The Philippines manufacturing industry once again showed a soft performance, with growth rates of output and new orders remaining below its historical average,” said Maryam Baluch, an economist at S&P Global Market Intelligence.
Available S&P Global Data Data on Selected Associations of Southeast Asian Ethnic Members Shows the Philippines is the third largestEST PMI Reading, Later in Thailand (52.7) and Indonesia (51.5).
In the report, S&P Global noted in August that output and new orders had “moderate” growth, supported by new customer acquisition and demand improvements.
It said manufacturing output rose for the third straight month in August, “increasing to its fastest speed in four months.”
“The growth that supports new businesses is sustained growth. The growth rate is roughly consistent with what was observed in July, with anecdotal evidence that new client acquisitions and improved basic demand trends as this drives the latest expansion.”
Philippine manufacturers also pointed out that foreign demand for goods is stronger, with order growth accelerating to seven months.
S&P Global said procurement activity has expanded, with August data showing the fastest growth in four months.
Ms Baluch noted that job creation was stopped in August, ending two consecutive months of “marginal growth” jobs.
“The combination of production demand and stagnant employment has led to a further backlog of backlog of backlogs, with the fastest accumulation rate in six months,” it said.
Standard & Poor’s Global said manufacturing companies reported that finished goods inventory in August “moderately declined” as it fulfilled new orders.
“The reduction has now been noted in three of the past four survey periods, with some companies reporting that they release their stocks to the market to mitigate potential losses from heavy rains,” it said.
S&P Global said inflation pressures in August were relatively soft even as material prices rose.
“The exhausted cost pressure, coupled with manufacturers’ efforts to control pricing to remain competitive, can provide a boost to the need for companies to regain sales. motivation,” Ms. Baluch said.
Philippine manufacturers’ confidence rose for the fourth straight month in the next 12 months to its highest since November 2024.
“The company hopes that demand conditions will improve and support production. But positive emotions remain softer than the long-term series averages,” S&P Global said.
Starting August 7, the imposition of 19% tariffs on many commodities from the Philippines could affect factory activity.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the slowdown was due to the “attitude” of some exporters that led to U.S. tariffs.
“(This is) partly offsetting exports before Trump came into effect on August 7, 2025, and some pre-loads of exports and certain local manufacturers’ seasonal increase in import and production activity in the third quarter,” he said.
Mr Ricafort pointed out that higher U.S. tariffs could eventually slow demand for U.S. exports and weaken economic growth. – Aubrey Rose A. Inosante
