Manufacturing output fell to a two-month low in January due to lower food and transportation supplies and slower growth in other non-ferrous mineral products, the Philippine Statistics Authority (PSA) reported on Friday.
Preliminary results of the latest PSA Monthly Integrated Survey of Selected Industries (MISSI) showed factory output, as measured by the volume of production index, decreased by 1.2% year-on-year in January.
This was slower than the 3.2% growth in January 2025 and the revised 2% increase recorded last December.
It was also the weakest growth in two months or since a 0.6% rise in November last year.
The sector’s performance has been in positive territory for nine consecutive months.
On a month-over-month basis, January output grew by 4.7%, down from a 3.6% decline in December. Stripping out seasonal factors, it rose 2.8% from 1.1%.
In comparison, the Philippines S&P Global Manufacturing Purchasing Managers’ Index (PMI) grew to 52.9 in January from 50.2 in December. It was the fastest pace in nine months or so since the 53-year increase began in April 2025.
PMIs are the leading indicator of factory activity, showing the volume of goods being purchased ahead of production activity weeks or months down the line. Reading more than 50 separates expansion from contraction.
Marco Antonio C. Agonia, an economist at the University of Asia and the Pacific, said the slippage in manufacturing activity points to a “discussion” of the 2026 issue.
“Although we expect the economy to improve slightly this year, the lack of concerted efforts to restore business confidence and improve business performance seems to continue to have a major impact on industries,” he said in an email.
Data from the first monthly business expectations survey (BES) of the Bangko Sentral ng Pilipinas showed that businesses had a monthly current index (CI) of 0.9% in January.
Although the positive value reflects business optimism, the figure was a crash from the quarterly CI of 29.7% seen in the fourth quarter of 2025.
Economist of Rizal Commercial Banking Corp. Michael L. Ricafort said that the decline in industrial production in January is mainly due to the political scandal last year that hindered the use of infrastructure, anti-corruption reforms that reduced demand in all chains and pressured producers.
“Higher tariffs could weigh on global trade, adversely affecting manufacturers who are part of the global supply chain of traders,” said Mr. Ricafort e-mail.
In a telephone interview, Philippine Chamber of Commerce and Industry Honorary Chairman Sergio R. Ortiz-Luis, Jr. he said business uncertainty caused by other possible US tariffs contributed to the slip.
According to PSA, the drop in factory production in January was caused by the largest annual decline in the weighted food index.
VoPI for food production fell 0.5% in January from 14.9% growth in December and a reversal from the revised 15.5% growth last year.
The index of food products accounts for 18.7% of production.
Meanwhile, price declines were recorded in other non-ferrous mineral products (6.8% in January from 32.4% in December), and transportation (-1.9% from 5.8%).
Another eight imported categories declined while the remaining 11 posted increases.
Additionally, PSA said the top three industry categories that contributed year-on-year growth in VoIP were computers, electrical and optical products (23.6% from 14.1%), beverages (21.1% from 4.8%), and electronics (16.7% from 11.4%).
Mr. Agonia said the sudden drop in food production growth could be attributed to seasonal adjustments and production conditions.
“Food producers are likely to reduce production after the holiday season, while cost pressures continue to build. We note that the growth of the Producer Price Index (PPI) has increased since November last year, mainly driven by the food products segment,” he said.
Year-on-year, PPI grew by 1.5% in January 2026, from 0.9% posted in the same period last year, and 0.8% in December, PSA data showed.
Its food subindex grew by 1.3%, up from 0.4% in January 2025 and reversing a contraction of 0.1% last December.
In the following months, Mr Agonia said that people are monitoring the movement of oil prices around the world following the escalation of conflicts in the Middle East.
“These high oil prices are expected to increase the cost of production in many sectors of the economy, leading to a deterioration in production conditions and higher retail prices.”
Mr. Ortiz-Luis said that ongoing negotiations with the US are necessary to improve the results of the factory.
“It’s like we don’t have the power to have it [we’re pushing them to] explain what exactly is the tax payable,” he said.
The capacity utilization rate – the rate at which industry resources are used to produce goods – averaged 77.8% in January, up slightly from 77.6% in December and 76.2% in January 2025.
All industry categories reported an energy consumption rate of over 60%, with coke and refined petroleum products reporting the highest rate at 84.5%. – Pierce Oel A. Montalvo
