By Justine Irish D. Tabile, Senior Reporter
PHILIPPINE FACTORY activity in February expanded at its fastest pace in eight years amid an increase in production and new orders as well as a “surge in business confidence,” S&P Global said on Monday.
However, the US-Iran conflict may cause a spike in oil prices, which may pose a risk to the manufacturing sector in the coming months, S&P added.
S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) rose to 54.6 in February from 52.9 in January, the strongest improvement since November 2017 when PMI stood at 54.8.
A PMI reading above 50 denotes better operating conditions than in the preceding month, while a reading below 50 shows deterioration.
“The Philippines manufacturing sector has had a solid start to 2026, with February marking its strongest performance since late 2017,” Maryam Baluch, an economist at S&P Global Market Intelligence, said in the report.
“A sharp influx of new orders underpinned robust growth of output, and in both cases, the expansions were historically pronounced and reached multi-year highs,” she added.
The Philippines recorded the fastest expansion in manufacturing activity in the Association of Southeast Asian Nations (ASEAN) region in February.
Based on available data from S&P as of Monday, the Philippines was ahead of Vietnam (54.3), Indonesia (53.8) and Thailand (53.5). Malaysia saw a deterioration in PMI to 49.3.
“The (Philippine manufacturing) sector’s positive performance was accompanied by a surge in business confidence. Firms were hopeful that demand conditions would continue to improve and drive further expansions in production volumes,” Ms. Baluch said.
Full ASEAN PMI data, as well as Myanmar’s PMI, are expected to come out on Tuesday.
S&P Global said February marked the third straight month where operating conditions have improved in the Philippines.
It noted Philippine manufacturers posted faster rise in production volumes and new orders in February,
“The sharp expansions across these two measures were accompanied by an uplift in business confidence, which rebounded notably from the recent low recorded in the month prior,” it added.
Output had increased for a second straight month, and at the fastest pace since November 2018.
S&P Global said there was a strong rise in order book volumes in the Philippine manufacturing sector in February.
“The respective seasonally adjusted index hit the highest level in just over eight years. The acquisition of new clients and bulk buying activity among customers was said to have pushed up new sales,” it said.
S&P attributed the growth in new factory orders to improvements in domestic and international demand, amid a modest rise in new export orders.
“Foreign sales increased for the second consecutive month, though the pace of expansion held steady in February,” it added.
JOB GROWTH SUSTAINEDMeanwhile, S&P Global saw a modest growth in employment last month, which it said reflects a rise in backlogs of work following a drop in January, as the increase in new orders put pressure on Filipino manufacturers’ capacity.
“Employment growth across the Philippines’ manufacturing sector was sustained in February, with staffing numbers rising for a second straight month,” it said.
“The pace of job creation was only modest overall and therefore insufficient to prevent a fresh buildup in backlogs of work,” it added.
Ms. Baluch said that jobs growth will further increase in the coming months as manufacturers scope to increase their staffing numbers amid rising backlogs.
Philippine manufacturers also recorded an accelerated input buying rate in February, which was the strongest pace in expansion since January 2025.
However, S&P Global said that there have been more delays in February due to increased buying activity, bad weather, and port congestion.
“Average delivery times for inputs lengthened for a third successive month. The incidence of delay was sharp overall and the most pronounced in 14 months,” it added.
Meanwhile, manufacturers reported falling operating expenses in February, which in turn allowed them to reduce their own charges.
S&P Global also noted manufacturers’ outlook for the next 12 months improved in February.
“The degree of confidence lifted notably from the recent low observed at the turn of the year. Panelists that foresee growth in production volumes largely linked this to hopes of further improvements in underlying demand trends,” it said.
RISING OIL PRICESMeanwhile, the S&P said that the US-Iran conflict could impact oil prices and thus affect operations of manufacturers in the Philippines.
“I think it is going to be something to watch if it does extend for an extended period of time,” S&P Global Market Intelligence Economics Associate Director Jingyi Pan said in an interview on Money Talks with Cathy Yang on One News on Monday.
Ms. Pan said that the impact of the war will depend on if this is just a knee-jerk reaction and “how some of the oil suppliers themselves are managing the risk altogether with their current supply.”
“In the manufacturing PMI for the Philippines, the price indicators have actually shown below 50, so just a very slight decline. But I think that could actually very well change if we do see the spike coming through and being reflected in March,” Ms. Pan said.
“But if it doesn’t turn out to be a prolonged situation, I think that is still going to help keep inflation a bit more moderated,” she added.
Oil companies on Monday announced an increase in the price of gasoline by P1.90 per liter, diesel by P1.20 per liter, and kerosene by P1.50 per liter, effective March 3.
The upward adjustments marked the 10th consecutive week of increase for diesel and kerosene, and eight straight weeks for gasoline. Since January, per-liter prices of gasoline, diesel, and kerosene rose by P6.70, P9.40, and P7.70, respectively.
Ms. Pan also said that the fresh global tariffs of Mr. Trump were not strongly felt in the February survey amid a below-50 input and output price indicators.
“I do see this as a bit of a reflection of the manufacturers themselves also keeping prices rather suppressed in February just to support the export growth [and new orders] situation as we see,” she said.
However, Ms. Pan noted that confidence remains subdued in February despite a recovery from January.
