Local factory growth continued to improve in February but accelerated at the slowest pace in two months after peaking in December last year.

Data from the latest S&P Global’s Purchasing Managers’ Index (PMI), released on Monday, March 3, revealed that although the Philippines’ manufacturing sector continued expanding in February, it continued its slowdown, which first dropped in January.

“After a period of strong increases in the final quarter of 2024, the growth rate moderated again in February and was modest overall,” S&P Global said, noting slower hikes in output and new orders.

February 2025 only reached a PMI reading of 51, declining from January’s 52.3, which also dropped from a nearly three-year high of 54.3 in December 2024.

Although the slowest in two months, the growth seen last month still marked the 18th straight month that local manufacturing remained above 50, signaling continued growth in the sector.

Meanwhile, manufacturers reduced the pace of purchasing in February, marking the weakest growth in 15 months, due to slowing demand and lower production needs.

Alongside this, production growth was also moderated, “with output growth at its softest since July 2024.”

Maryam Baluch, economist at S&P Global Market Intelligence, echoed the declining factory growth but noted the increase in employment seen for the first time in three months.

This employment hike was the result of factory owners hiring more workers “to meet sustained demand improvements,” as reflected in an increase in backlogged orders.

Baluch added that the inflation slowdown might further cut key borrowing costs, which “could in turn boost somewhat weakened business confidence and support further new order growth.”

Looking ahead, local manufacturers look forward to an improved health in the sector by February 2026.

Likewise, despite the weakest confidence level in 10 months, firms remain hopeful that demand will improve, and that the upcoming midterm election will drive further growth.