The Philippine manufacturing sector contracted sharply in November, posting its steepest decline since August 2021, according to Standard & Poor’s (S&P) Global.

S&P Global’s Manufacturing Purchasing Managers’ Index (PMI) — a composite gauge of business conditions across new orders, output, employment, suppliers’ delivery times, and inventories — fell to 47.4 in November from 50.1 in October. Any reading below 50 indicates a contraction in the sector.

In its report released Monday, 1 December, S&P Global attributed the downturn to simultaneous declines across all major PMI components, driven mainly by a steep drop in new orders and production.

“Output and new orders contracted at their fastest rates since August 2021, driven by weak customer demand. Exports, purchasing and employment also declined, reflecting broader challenges in the sector,” said S&P Global Market Intelligence Economics Director Trevor Balchin.

The report said new orders and production both fell for the third consecutive month, with the latest contraction marking the sharpest decline since August 2021. Weaker demand, product life cycle changes, and reduced customer requirements contributed to the decline. Many firms also reported business disruptions due to typhoons Tino and Uwan.

New export orders and purchasing activity likewise decreased for the second straight month. The sector also saw job losses for the first time since May, with businesses citing non-renewal of contracts and downsizing tied to lower output requirements.

Despite the downturn, S&P Global said manufacturers remain optimistic, with business sentiment rising to its strongest level since November 2024. Firms anticipate higher output in the coming year, driven by expected new projects, increased orders, business expansion, and improved economic conditions.

"There were signs of promise, however, as manufacturers expressed increased optimism for the next 12 months, anticipating growth due to new projects and improved economic conditions. Input price inflation eased to a four-month low, remaining well below the long-term trend, while output prices rose slightly,” Balchin added.

"Overall, while the manufacturing sector faces immediate challenges, the outlook suggests cautious optimism for growth moving forward.”