The Philippines’ manufacturing sector saw a near-stagnation in May, with S&P Global’s Purchasing Managers’ Index (PMI) slipping to 50.1 from 53.0 in April.
The latest data indicates a significant slowdown in growth momentum after a solid revival in April, S&P said.
Output in the manufacturing sector fell into contraction territory for the second time in three months, albeit marginally. New order growth also slowed, with a notable downturn in demand from foreign markets weighing on total new sales. This marks the strongest fall in new export orders since last November.
The drop in production requirements led to a fresh decline in employment, the first in four months. The rate of job shedding was marginal but the strongest in nearly a year, as companies postponed filling open positions following voluntary resignations.
Maryam Baluch, economist at S&P Global Market Intelligence, said the promising growth observed at the beginning of the second quarter signaled a notable cooling in May.
“While new orders continued to increase, they did so at a slower pace, overshadowed by contractions in other areas. Notably, output, employment, and the inventories of both purchases and finished goods all experienced fresh declines,” said Baluch.
“The situation was further exacerbated by a deteriorating demand from foreign markets, with May witnessing a sharper drop in new export orders. As global trade tensions escalate, the outlook for overseas demand appears increasingly precarious,” Baluch said.
The slowdown in new order growth was reflected in a softer rate of increase in input buying activity, the weakest in 18 months.
Manufacturers also reported longer lead times for receiving essential materials, complicating the replenishment of input stocks, which were depleted for the first time in three months. Holdings of finished goods also saw a reduction as firms utilized inventories to meet demand.
Despite the overall slowdown, inflationary pressures remained historically subdued in May, though showing slight intensification. Cost burdens and output charges increased to their strongest extent since January, but the pace of inflation remained relatively modest.
“On a brighter note, inflationary pressures remain modest and historically subdued, which could play an important role in supporting demand moving forward. The stability of price pressures may also provide a necessary buffer against the challenges posed by a cooldown in new orders and external market uncertainties,” Baluch said.
While hopes for continued new order growth supported confidence for the year ahead, the level of sentiment, though strengthening on the month, was the third-weakest in the series’ history, with only optimism registered in March 2020 and April 2025 being more subdued.
