By Justine Irish D. Tabile, Senior Journalist
PHILIPPINE FACTORY work done for i the first of five months in April amid a sharp drop in new orders, S&P Global said Monday.
The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) fell to 48.3, down from 51.3 in March, indicating a “moderate deterioration in operating conditions.”
A PMI reading below 50 is indicative a deterioration in operating conditions from the previous month, while a reading above 50 indicates improvement.
“The Philippine manufacturing sector began the second quarter of 2026 with a renewed deterioration in operating conditions as the headline index fell below the neutral reading of 50 for the first time in five months,” said Maryam Baluch, economist at S&P Global Market Intelligence, in a report.
April marked the first contraction in the PMI since the 47.4 reading in November 2025.
Apart from the Philippines, Indonesia (49.1) was the only member of the Association of Southeast Asian Nations (ASEAN) to see a drop in the PMI in April.
In contrast, Malaysia had the highest PMI (51.6), followed by Myanmar (50.9) and Vietnam (50.5).
In the Philippines, S&P Global said new orders fell sharply, while production stalled.
According to S&P, the decline in new orders has been steepest since August 2021.
“The new sales volume was also depressed by the deterioration of the image of the export market,” said Ms. Baluch.
Philippine manufacturers reported that new export orders fell “at a faster and faster pace” in April, as closed trade routes led to the suspension of shipments and created uncertainty among customers.
S&P Global said this was the steepest drop in new export orders since mid-2020, when the pandemic ended.
“The new sales volume was also depressed by the deteriorating demand picture in the foreign market,” said Ms. Baluch.
Manufacturing firms also saw sluggish production levels in April.
“Production levels stagnated, and firms cut back on purchasing and hiring as they faced higher costs, often attributed to the war in the Middle East,” added Ms. Baluch.
Input inflation accelerated to its fastest pace since December 2022, which firms attributed to higher energy and shipping costs related to the Middle East war.
“Costs were largely passed on to customers through sharp and strong increases in factory gate costs. The rate of retail inflation was the fastest in 41 months,” S&P Global said.
Manufacturers saw purchasing activity decline for the second month in a row in April, as they turned to inventories to meet production needs. This led to a very large decline on the pre-production list from 2020.
S&P Global noted that rising costs have prompted manufacturers to cut workersfnumbers. This marked the first drop in hiring activity this year.
Despite the decline in jobs, Philippine firms reported low backlogs amid a sharp drop in new orders.
“Looking at supplies, April saw another deterioration in supplier performance. Average lead times for supplies increased strongly. Long delivery times were largely linked to the war in the Middle East,” S&P Global said.
Despite the challenges, manufacturers reported strong business confidence, supported by hopes for a growing customer base and improving demand.
“Manufacturing companies in the Philippines are waiting to solve the current problems, as confidence for next year has increased to 17 months,” said Ms. Baluch.
Francisco Cid L. Terosa, associate professor and former dean of the School of Economics at the University of Asia and the Pacific, said the decline in production in April reflects the negative impact of the Middle East conflict.
“The flow of important production materials such as petroleum products and products, liquefied natural gas, and the like was clearly disrupted by the ongoing crisis,” said Mr. Terosa in a Viber message.
“If the contraction continues, I expect the PMI slump to deepen and manufacturing sector growth prospects to fade,” he added.
