Factory activity contracts in September

October 2, 2026 | 12:00am

MANILA, Philippines — Manufacturing activity in September slipped to negative territory for the first time in five months due to weak demand and increased competition from foreign rivals, according to S&P Global.

Based on S&P Global’s survey, the Philippines’ Manufacturing Purchasing Managers’ Index (PMI) went down to 49.6 in September, snapping the previous month’s near 10-year high reading of 54.9.

This also marked the first contraction in the manufacturing sector’s operating conditions since April, when the PMI was at 48.3.

Generated from a survey of around 400 manufacturers, the PMI tracks new orders, output, employment, suppliers’ delivery times and stocks of purchases.

An above 50 PMI reading indicates an overall increase from the previous month, while below 50 means a decline.

“Filipino manufacturers reported a notable impact from high oil prices, strong international competition and weak demand during September. Output, new orders and employment all dropped into contractionary territory,” S&P Global Market Intelligence principal economist Sian Jones said.

Output posted its sharpest decline since November last year as manufacturers received less orders and faced strong international competition.

As production requirements fell, firms slightly reduced the workforce count.

Manufacturing companies also cut input purchases and stock levels due to delays in supplier lead times.

As higher oil prices led to transportation delays and logistics issues, manufacturers saw suppliers’ lead times stretch to one of the longest in two years.

“One area of reprieve was cost pressures, as despite hikes in oil prices, overall cost burdens rose at a softer pace. Nonetheless, efforts to protect margins led to a sharper rise in selling prices,” Jones said.

While companies expect output to pick up over the coming year, the level of optimism was the weakest since January as manufacturers continue to face challenges related to pricing power and international competition.

“The viability of continuing to absorb hikes in costs will be an important consideration in the coming months in bids to drive customer demand,” Jones said.