Factory growth accelerates to near 10-year high

The Philippine manufacturing sector experienced its strongest growth in nearly a decade during August, according to S&P Global. The country's Purchasing Managers' Index (PMI) reached 54.9, marking the highest level since December 2016. This surge in activity was fueled by heightened output and robust demand. The PMI, which gauges the manufacturing sector's health, is derived from a survey of approximately 400 manufacturers and considers factors such as new orders, production output, employment rates, suppliers' delivery times, and inventory levels.

An index above 50 signifies growth, while below 50 indicates a decline. S&P Global Market Intelligence economist Maryam Baluch attributed the sector's momentum to increasing demand and output. New orders experienced significant growth, propelled by the launch of new products, expanded customer base, and repeat business. The sector's expansion was also driven by a rise in international sales, with new export orders increasing for the first time in six months.

Manufacturers boosted their purchasing and hiring to accommodate higher production needs. Additionally, employment within the manufacturing sector rose for the first time in five months, marking the strongest job creation growth in 21 months. While input costs increased slightly in August, compared to the previous month, overall inflation remained modest and represented the lowest rate in the current six-month period.

As a result, business confidence for the year ahead surged to its highest level since November 2024. Manufacturers who anticipate higher output in the coming months highlighted expansion plans, new product lines, and securing new customers as key factors in their optimism.