By Isa Jane D. Acabal, Researcher
Factory output expanded to a four-month high in December driven by faster increases within the production of other non-metallic mineral products, food products, and a recovery in machinery and equipment, the Philippine Statistics Authority (PSA) reported on Friday.
Preliminary results of the PSA’s Monthly Integrated Survey of Chosen Industries showed manufacturing output, as measured by the amount of production index (VoPI), inched up by 1% 12 months on 12 months in December, faster than the 0.5% gain in December 2024.
Nonetheless, this was a turnaround from the revised 1.1% drop in November.
The newest manufacturing output growth was the fastest pace in 4 months or because the 1.3% expansion in August 2025.
For 2025, factory output fell by 0.02%, a reversal from the 0.7% annual average growth seen in 2024.
On a monthly basis, December’s output picked up by 0.7% from the two.3% decline in November. Stripping out seasonality aspects, it grew by 4.2%.
As compared, the S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) expanded to 50.2 in December from 47.4 in November.
The PSA said December’s year-on-year growth was driven by faster annual increases within the manufacture of non-metallic mineral products (31.4% in December from 6% in November), food products (10.4% from 7.6%), and a recovery in machinery and equipment except electrical (10.1% from -10.7%).
Twelve other industry divisions posted expansions, while seven saw declines.
In response to the PSA, the highest three industry divisions that contributed to the general year-on-year growth of VoPI for manufacturing were food products, other non-metallic mineral products, and computer, electronic and optical products (10.3% in December from 14.5% in November).
“[The] growth fueled by stronger production in food products, non-metallic minerals, and a rebound in machinery and equipment shows how each consumer demand and business investments are helping sustain momentum,” Ferdinand A. Ferrer, president of the Philippine Chamber of Commerce and Industry (PCCI), said in a Viber message.
Marco Antonio C. Agonia, an economist on the University of Asia and the Pacific, said the recovery in VoPI for manufacturing in December could be attributed to “seasonal effects.”
“Manufacturers likely increased production of food products for the vacations, and intermediate construction inputs and machinery as businesses planned for ramped up capex (capital expenditures) in 2026,” he said.
He added that strong export demand can have also encouraged more manufacturing activities.
In December, exports climbed by 23.3% 12 months on 12 months to $6.99 billion from 21.6% growth in November. This was a turnaround from the 1.9% drop in December 2024.
This was the fastest pace for exports in six months, because the 26.9% growth in June 2025.
“The quicker, though still benign, inflation reading can have not less than signaled soft inflation into this 12 months, allowing firms to plan ahead accordingly,” Mr. Agonia said.
Inflation quickened to 1.8% in December, picking up from 1.5% in November but easing from 2.9% in December 2024.
This brought the full-year average to 1.7% in 2025 from 3.2% in 2024.
This was the slowest rate in nine years or because the 1.3% rate in 2016 but was barely above the central bank’s 1.6% estimate for 2025.
The Bangko Sentral ng Pilipinas cut borrowing costs by one other 25 basis points in December, bringing key policy rate to 4.5%.
In response to Mr. Agonia, the speed cut “likely had little to no impact” in December’s manufacturing output because they typically take at most two years to “fully work their way through the economic system.”
For Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion, the central bank’s accommodative monetary policy helped eased financing conditions amid the benign inflation.
“Lower borrowing costs gave firms more room to administer operating expenses, supporting production decisions and stabilizing manufacturing activity,” he said.
Mr. Asuncion expects moderate growth in manufacturing output this 12 months as “supported by a more accommodative policy stance and resilient consumer demand.”
PCCI Honorary Chairman Sergio R. Ortiz-Luis, Jr. also sees improvement within the manufacturing output this 12 months.
“The projection [on factory output] towards this 12 months, early a part of this 12 months, will still be going up. Not in an enormous way, but it would be positive,” he said in a phone call.
Mr. Agonia expects “mild improvements” within the manufacturing performance this 12 months as business sentiment recovers from the economic slowdown within the fourth quarter and full-year 2025.
“Nonetheless, any significant changes from the establishment may require more concerted efforts towards improving manufacturing sector conditions,” he said.
Gross domestic product (GDP) expanded by 3% within the fourth quarter of 2025, a slowdown from the 5.3% in the identical period in 2024 and the revised 3.9% print within the third quarter of 2025.
This brought the full-year economic growth to 4.4%, missing the federal government’s 5.5% to six.5% goal.
The newest annual GDP print was slower in comparison with the 5.7% growth in 2024 and was the weakest growth because the 9.5% slump in 2020.
December’s capability utilization, or the extent to which industry resources are utilized in producing goods, averaged 77.5 % in December, higher than the revised 77.4 % in November and the 76.1% posted in the identical month in 2024.
Looking ahead of 2026, Mr. Ferrer said the PCCI stays “cautiously optimistic.”
“Continued government infrastructure projects, strong local consumption, and supportive monetary policy should help sustain growth. At the identical time, challenges like rising global prices, supply chain issues, and energy costs should be addressed,” he added.