MANUFACTURERS will put expansion plans on hold in 2027, as the continued weakening of the peso jacks up operating costs and further squeezes their margins, according to the Federation of Philippine Industries (FPI).
While manufacturers would do their best to retain their workers next year, FPI chairman Elizabeth Lee said they would postpone expansion plans due to surging operating costs.
‘We want to hold onto our workers as much as possible, because there’s so much equity already put in the workers,’ Lee recently told reporters. ‘But in terms of expansion, that will be on the shelf for now.’
At present, she noted that manufacturers are already using the P65:$1 assumption when purchasing imported inputs to beef up their inventories. The peso recently hit a new record low of P64 per dollar.
Higher import costs, however, would not instantly translate to increased prices for Filipinos. Manufacturers would absorb added costs so as to avoid further demand destruction on cash-strapped consumers.
‘Manufacturers also cannot just push that whole increase in cost down the line, because we already have demand destruction,’ Lee said.
‘If the prices go up too high, then who’s going to be buying the products down the line? For manufacturers, you actually have to have a balancing act.’
Other factors also add pressure to manufacturers, such as the costs of logistics and electricity necessary to efficiently run factories.
‘But the other thing that we can also fix is the ports,’ Lee said, pointing to congestion due to empty containers stuck in maritime gateways.
‘It’s because we do not export enough, but we import so much that the empties are now stuck [at ports] and that’s actually not helping with the business.’
The Philippines Manufacturing Purchasing Managers’ Index (PMI) fell to 49.6 in September from 54.9 in August, Standard and Poor’s (SandP) Global Market Intelligence said. This marked the first deterioration in operating conditions in the goods-producing sector since April.
The downturn was partly driven by a renewed contraction in production, which fell for the first time in nine months and at the fastest pace since November 2025, according to the report.
‘Output, new orders and employment all dropped into contractionary territory. Firms also signaled moves into retrenchment mode via a fresh decline in input buying and a running down of inventories,’ SandP Global Market Intelligence principal economist Jones said.