PHILIPPINE manufacturers faced a renewed contraction in September as weak demand and international competition weighed on production, even as rising oil prices translated into a relatively softer increase in overall input costs, Standard and Poor’s (SandP) Global Market Intelligence said.
The Philippines Manufacturing Purchasing Managers’ Index (PMI) fell to 49.6 in September from 54.9 in August, marking 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 SiSn Jones said.
SandP Global said manufacturers reported weaker demand and intensified international competition during the month, while high oil prices added to operating pressures.
New orders declined marginally at the end of the third quarter, reversing four consecutive months of growth. New export orders also fell, with surveyed firms citing higher prices and competition as factors discouraging purchases.
The weaker demand also prompted manufacturers to scale back input buying for the first time since May and reduce inventories, the firm said. Backlogs also fell at their fastest pace since April as lower orders eased pressure on production capacity.
The slowdown spilled into employment, with manufacturers recording a fresh round of job cuts, although the decline in staffing was slight.
Despite the increase in oil prices, input cost inflation eased in September.
‘Greater operating expenses were linked to unfavorable exchange rate movements against the US dollar and higher oil prices. The rate of input price inflation was historically muted and the slowest for three months,’ SandP Global said.
Manufacturers, however, raised selling prices at a faster pace as they sought to pass higher costs on to customers. SandP said the increase remained below the survey’s long-run average. It also added that efforts to protect margins contributed to the sharper rise in selling prices.
Higher oil prices were also cited as a factor behind worsening supplier performance, with transportation and logistics disruptions lengthening input delivery times sharply. The delays were among the most significant recorded in nearly two years, according to the report.
For SandP, the combination of weaker demand and limited pricing power also weighed on manufacturers’ outlook. They remained optimistic on output increase over the next 12 months, but confidence dropped sharply from August’s 21-month high to its weakest since January.
Manufacturers, per Jones, were becoming less certain about their ability to maintain margins while competing in international markets.
‘The viability of continuing to absorb hikes in costs will be an important consideration in the coming months in bids to drive customer demand.’