The local manufacturing sector ended 2024 driven by strong growth in output and new orders, S&P Global said in a report on Thursday.

Factories increased outputs and new orders last month to 54.3 mark from 53.8 in the S&P Global Philippines Manufacturing Purchasing Manager Index, the highest since April 2022.

“The manufacturing sector ended 2024 on a positive note, with further improvements in demand resulting in sharp and significant increases in new orders and output,” S&P Global Market Intelligence economist Maryam Baluch said.

Output, demand higher

The PMI is an indicator of manufacturing performance. S&P Global said both output and new orders rose sharply and at broadly similar rates, marking the strongest growth since April 2022.

According to the report, the strong growth was supported by robust underlying demand trends, product diversification, and new client acquisitions.

Demand from international markets also went up, marking the first increase in new export orders in five months.

“Firms also expanded their purchasing activity to meet production requirements. December highlighted a moderation in inflationary pressures, marking a shift from the spike observed in November. In fact, cost burdens and output charges rose at historically muted rates,” Baluch said.

Baluch, however, said that while production efficiency allowed manufacturers to maintain their growth momentum, it also led to a slight drop in employment.

“However, this could be a temporary blip, especially if demand remains resilient as anticipated throughout 2025,” Baluch said.

For this year, firms remained confident that output would rise, amid hopes that demand trends will strengthen further and plans to launch new products.

PCCI exec has positive view

Philippine Chamber of Commerce and Industry chairman George Barcelon remained optimistic about productivity, stressing sustained foreign investments in economic zones.

“We’ve been getting interest from the US and Japan, and doing well in footwear and other wearables. Dyson, the maker of vacuum cleaners and hair dryers, also shared plans in the Philippines,” he said.

In 2020, Dyson chief executive officer Ronald Krueger told BBC the firm will focus additional investment of $3.67 billion in Singapore, the UK, and the Philippines over five years.

“The new PMI data was not a jump, but customers of Filipino manufacturers, especially those in electronics have been anchored by the peso dropping against the US dollar,” Barcelon said.

On the other hand, he said players in the construction industry will likely endure slower demand as “property analysts have seen a glut of condominium units which could be fully absorbed in five years.”

Rizal Commercial Banking Corp. chief economist Michael Ricafort said prices of goods might fall further and demand for big-ticket items might rise as the Bangko Sentral ng Pilipinas lowers its benchmark for interest rates after recent low inflation rates.

“For the coming months, further local policy rate cuts would still lead to faster growth in local manufacturing activities though with some lag effects, after the first local policy rate cut in nearly four years,” he said.

“Crude oil prices were also near one-year lows, alongside lower prices of some major global commodities at the lowest in about four months would help reduce the importation costs and overall input costs of local producers,” Ricafort continued.