Manufacturing output eased to a two-month low in January dragged by contractions in food and transport equipment in addition to sluggish growth in other non-metallic mineral products, the Philippine Statistics Authority (PSA) reported on Friday.
Preliminary results of the PSA’s latest Monthly Integrated Survey of Chosen Industries (MISSI) showed factory output, as measured by the amount of production index, slowed by 1.2% 12 months on 12 months in January.
This was slower than the three.2% growth in January 2025 and the revised 2% increase recorded last December.
It was also the weakest growth in two months or because the 0.6% uptick in November last 12 months.
The sector’s output has been in positive territory for nine straight months.
Month on month, January’s output grew by 4.7%, from a 3.6% decline in December. Stripping out seasonal aspects, it inched up by 2.8% from 1.1%.
Compared, the Philippines in S&P Global Manufacturing Purchasing Managers’ Index (PMI) expanded 52.9 in January from 50.2 in December. It was the fastest pace in nine months or because the 53 expansion logged in April 2025.
PMIs are a number one indicator for factory activity, reflecting the amount of materials purchased prematurely of producing operations weeks or months down the road. A reading above 50 separates expansion from contraction.
Marco Antonio C. Agonia, an economist on the University of Asia and the Pacific, said that the slip in manufacturing activity points to the “muddling through” narrative of 2026.
“While we expect economic activity to barely get well this 12 months, the absence of concerted efforts to revive business confidence and improve business operations appears to proceed weighing on industrial activity,” he said in an e-mail.
Data from the Bangko Sentral ng Pilipinas’ inaugural monthly business expectations survey (BES) showed that companies had a current-month confidence index (CI) of 0.9% in January.
While the positive value indicated business optimism, the figure was a crash from the quarterly CI of 29.7% seen within the fourth quarter of 2025.
Rizal Industrial Banking Corp. Chief Economist Michael L. Ricafort said that the economic production slowdown in January is essentially attributed to political scandal last 12 months that curbed infrastructure spending, with anti-corruption reforms dampening demand across supply chains and weighing down on manufacturers.
“Higher tariffs could have weighed on global trade, adversely affecting manufacturers which can be a part of the worldwide supply chains of exporters,” Mr. Ricafort said in an e-mail.
In a phone interview, Philippine Chamber of Commerce and Industry Honorary Chairman Sergio R. Ortiz-Luis, Jr. said that business uncertainty brought on by further potential US tariffs contributed to the slip.
In response to the PSA, the slowdown in factory output in January was attributable to the sharp annual declines within the heavily weighted food index.
Food manufacturing’s VoPI dipped by 0.5% in January from the 14.9% growth in December and a reversal from the revised 15.5% growth a 12 months earlier.
The food products index accounted for 18.7% of producing activity.
Meanwhile, slowdowns were recorded in other non-metallic mineral products (6.8% in January from 32.4%in December), and transport equipment (-1.9% from 5.8%).
Eight other divisions logged declines while the remaining 11 posted expansion.
Moreover, the PSA said that the highest three industry divisions that contributed to the general year-on-year growth within the VoPI were computer, electronic and optical products (23.6% from 14.1%), beverages (21.1% from 4.8%), and electrical equipment (16.7% from 11.4%).
Mr. Agonia said that the sudden plunge in food manufacturing growth could also be attributed to seasonal adjustments and manufacturing conditions.
“Food manufacturers likely scaled down production after the vacation season, while cost pressures proceed to construct. We note that growth within the Producer Price Index (PPI) has been accelerating since November last 12 months, largely driven by the food products segment,” he said.
Yr on 12 months, the PPI grew by 1.5% in January 2026, from the 0.9% posted in the identical period last 12 months, and the 0.8% in December, PSA data showed.
Its food subindex grew by 1.3%, higher than the 0.4% in January 2025 and reversing the 0.1% contraction last December.
For the next months, Mr. Agonia said that individuals are monitoring movements in global oil prices following conflict escalation within the Middle East.
“These higher oil prices are expected to boost production costs for many economic sectors, resulting in deterioration in manufacturing conditions and better retail prices.”
Mr. Ortiz-Luis said that that continued discussions with the US is essential to enhance factory outputs.
“It’s like we have now no leverage with them. And [we’re pushing them to] define what precisely the applicable tariffs are,” he said.
Average capability utilization — the extent industry resources are utilized in producing goods — averaged 77.8% in January, barely higher from the 77.6% in December and 76.2% in January 2025.
All industry divisions reported capability utilization rates above 60%, with coke and refined petroleum products reporting the very best rate at 84.5%. — Pierce Oel A. Montalvo