The Philippine manufacturing sector showed a modest rebound in December after sinking to a four-year low in November, according to S&P Global.

In its latest update on the Philippines’ Purchasing Managers’ Index (PMI) released on 02 January 2026, S&P Global said manufacturing activity improved slightly, with the PMI rising to 50.2 in December from 47.4 in November. The reading snapped a three-month contraction streak and marked the sector’s strongest performance since August, after November recorded its weakest level since August 2021.

The PMI is a composite indicator of manufacturing business conditions, covering new orders, output, employment, suppliers’ delivery times, and inventories. A reading above 50 signals expansion. S&P Global attributed December’s improvement largely to a pickup in new orders, which rose for the first time in four months.

“December PMI data signalled a slight improvement in operating conditions in the Filipino manufacturing sector, an encouraging move from the solid deterioration seen in the month prior,” said Maryam Baluch, economist at S&P Global Market Intelligence.

“New order volumes rose for the first time in four months, which helped partly ease the ongoing downturn in production. Fuelled by this positive direction, companies increased their purchasing activity for the first time since September, while the labour market showed signs of stabilising,” she added.

Despite these gains, S&P Global noted that overall output and export volumes continued to decline in December. Employment in the manufacturing sector also fell for a second straight month, although at a slower pace compared with November.

Manufacturers reported an increase in post-production inventories as firms positioned themselves for a potential pickup in demand, with many expecting higher output through 2026. However, business optimism eased slightly from the 12-month high recorded in November.

“The improvement was tepid across the sector, and its sustainability will largely depend on whether demand can be maintained and further bolstered, bringing growth back to production,” Baluch said.

She added that the sector continues to face significant headwinds from weak export markets, limiting broader expansion. “At present, manufacturing growth is being driven mainly by domestic demand, with external markets offering little support.”