THE Federation of Philippine Industries (FPI) on Monday said the increase in the country’s purchasing manager’s index (PMI) marked the manufacturing sector’s “modest return to expansionary territory.“
Last Friday, financial intelligence firm S&P Global reported the manufacturing PMI “moved back above the neutral mark of 50.0 in December [2025], rising to 50.2 from 47.4 in November.“
The PMI measures the health of a country’s manufacturing sector, with 50 as the dividing line between growth (above 50) and contraction (below 50).
The S&P report explained: “In contrast to the solid deterioration observed in the previous month [November], the latest data signaled a slight improvement in the overall health of the manufacturing sector. The year ended with a renewed rise in intakes of new work, thereby ending a three-month period of contraction. The pace of increase was modest but the most pronounced since April.“
Reacting to the rebound, FPI chairman Elizabeth Lee said: “We are back in positive territory — a clear sign of resilience. The challenge and opportunity now is to turn this recovery into lasting industrial strength by investing in innovation and diversification.“
She attributed the PMI recovery to “business operations normalizing after typhoon disruptions in November, new orders placed for the first time since August, and firms cautiously resuming purchasing activity, anticipating future output growth despite lingering supply chain challenges.“
The jump is domestically-led, Lee noted, admitting that export orders remained subdued at yearend.
“Export growth could provide a stronger external tailwind, particularly in electronics, which account for nearly half of Philippine exports. If realized, this momentum will help sustain PMI readings above 50,“ Lee said.
Sustaining the growth, Lee added, will depend on the following:
– Resilience against climate disruptions, and supply chain shocks;
– Diversification of manufacturing, moving beyond the current dual structure of food processing (nearly half of domestic share) and electronics (nearly half of exports);
– Strengthening mid-complexity industries such as machinery, chemicals, and wood products to reduce volatility and broaden employment opportunities.
Urgency of reforms
Citing figures from World Bank Data, Lee said the manufacturing sector accounts for 15.7 percent of the country’s gross domestic product (GDP), “well below Asean’s 22–27 percent range. This underperformance highlights the urgency of Tatak Pinoy reforms to diversify and deepen industrial capacity, ensuring manufacturing becomes a stronger engine of national growth,“ Lee said.
The Tatak Pinoy law (Republic Act 11981) seeks to boost local industries, promote globally competitive Filipino products. It encourages public-private collaboration, innovation, and investment in key areas like human resources, technology, and infrastructure to move beyond basic manufacturing and services.
“By investing in innovation, skills, and industrial upgrading, Tatak Pinoy can elevate the country’s manufacturing complexity and competitiveness — ensuring that growth is not only cyclical but enduring, inclusive, and proudly Filipino,“ Lee said.
The FPI — the main umbrella organization of the country’s manufacturers and producers — advocates for policies that strengthen domestic industries, promote fair trade, reduce business costs, encourage exports, and support job creation. It lobbies for reforms like anti-smuggling laws and local preference procurement.
