Manufacturing activity in the Philippines expanded at a faster pace in February, with factory output rising at the strongest rate since November 2018, according to the latest purchasing managers’ index (PMI) report by S&P Global Market Intelligence.

The country’s PMI rose to 54.6 in February, up from 52.9 in January, signaling a stronger improvement in operating conditions in the goods-producing sector. A reading above 50 indicates expansion compared with the previous month.

Survey data collected from Feb. 10 to 20 showed accelerated increases in both production volumes and new orders midway through the first quarter of 2026. Operating conditions have now improved for three consecutive months, with the latest PMI reading marking the most pronounced improvement since November 2017.

The latest PMI report released on Monday, March 2, highlighted that output rose at the strongest pace since November 2018, driven by sustained growth in new orders. The seasonally adjusted index for new business also accelerated, reaching its highest level in more than eight years, supported by new client acquisitions and bulk purchasing activity among customers.

Manufacturers increased purchasing activity at a faster rate to support higher production requirements, while employment continued to grow for a second straight month, albeit at a modest pace. As new orders rose faster than hiring, backlogs of work increased following a decline in the previous month.

Foreign demand also improved, with export orders expanding for a second consecutive month, although the pace of growth remained modest.

“The Philippines’ manufacturing sector has had a solid start to 2026, with February marking its strongest performance since late 2017. A sharp influx of new orders underpinned robust growth of output, and in both cases, the expansions were historically pronounced and reached multi-year highs,” said S&P Global Market Intelligence economist Maryam Baluch.

“Businesses, in turn, continued to expand their purchasing activity, which rose at a faster pace. However, jobs growth remained steady and was relatively modest overall. With backlogs rising, manufacturers have further scope to increase their staffing numbers in the coming months,” Baluch said.

“The sector’s positive performance was accompanied by a surge in business confidence. Firms were hopeful that demand conditions would continue to improve and drive further expansions in production volumes,” she added.

The report also showed that purchasing activity expanded at the fastest pace since January 2025, while inventories of purchases and finished goods increased as firms anticipated stronger demand ahead.

Supply chains remained under pressure during the month, with delivery times lengthening for a third consecutive month amid poor weather conditions and port congestion. Meanwhile, manufacturers reported fractional declines in both operating expenses (opex) and selling prices.

Business confidence regarding the 12-month outlook improved notably from the low recorded at the start of the year, with firms linking optimism to expectations of stronger underlying demand trends.