THE contraction of the Philippine manufacturing sector in September is only a ‘cautionary signal’ as this only stemmed from ‘short-term’ challenges,’ according to the Philippine Economic Zone Authority (Peza).
‘We in Peza remain positive despite the recent drop of the [Purchasing Manager’s Index] PMI for September, as we believe that this is more of a cautionary signal than a cause for alarm, stemming from short-term challenges rather than structural weaknesses,’ Peza Director General Tereso O. Panga told the BusinessMirror in a Viber message on Thursday.
Citing survey reports, the Peza chief pointed to weaker domestic demand, fewer client orders, supply chain disruptions caused by weather, the impact of various policy shifts and the recent geopolitical movements as key contributors to the slowdown in the manufacturing sector.
He also noted that rising input costs continue to place pressure on manufacturers, prompting some firms to scale back orders or output.
Panga said while foreign demand remains stable, the lower local demand ‘weighs’ on overall performance of the manufacturing sector in the country.
‘For Peza, this underscores the importance of strengthening ecozone resilience against weather-related disruptions, ensuring stable and predictable policies that support manufacturers, and helping firms manage costs and diversify their markets,’ Panga told this newspaper.
Nevertheless, he said the investment promotion agency sees this trend as ‘temporary,’ pointing out that investments greenlighted by Peza this year reflect a ‘continued upward trajectory.’
On Wednesday, S and P Global Market Intelligence reported that the Philippines’ Purchasing Managers’ Index (PMI) score fell to 49.9 in September from the 50.8 in August.
‘While signaling just a fractional deterioration in the health of the manufacturing sector, this was only the third time in just over four years where the headline index has been in contraction territory,’ S and P Global said.
Data from Peza showed that it has approved P154.70 billion worth of investments in the January to September 2025 period, up 33.5 percent compared to the P115.87 billion approved in the nine-month period in 2024.
Panga also noted that the economic zones have been generating more interest as multinational corporations (MNCs) are setting their sets on ecozones for their offshore operations.
For one, the Peza chief said there are companies ‘shifting production out of China in favor of the Philippines to benefit from our lower tariff for exported goods to the US and EU as well as our most generous fiscal incentives package for investors across Asean.’
The agency also sees this development in the manufacturing sector ‘as an opportunity to step up coordination with government and industry partners so that our locators remain competitive, resilient and able to contribute to the Philippines’ positioning as one of the fastest-growing economies in the Asia-Pacific.’