Manila, January 3, 2025 – The Philippine manufacturing sector capped 2024 on a high note, recording its strongest performance in over seven years, driven by a surge in demand during the holiday season. However, this growth failed to translate into job creation.
According to S&P Global, the country’s Purchasing Managers’ Index (PMI), a measure of manufacturing activity, climbed to 54.3 in December 2024 from 53.8 in November. This marked the 16th consecutive month the PMI stayed above the 50-point threshold, indicating expansion. The December reading was the highest since November 2017.
Maryam Baluch, an economist at S&P Global, attributed the improvement to robust demand, which spurred a significant increase in new orders and production output. “The Filipino manufacturing sector ended 2024 on a positive note, with firms expanding purchasing activities to meet production requirements,” Baluch noted.
Output and new orders, which are key components of the PMI, drove the sector’s growth. Manufacturers reported increased production levels to cater to heightened demand, reflecting the health of the industry during the peak holiday season.
Despite the strong performance, the sector saw a slight reduction in employment. After three months of job creation, companies trimmed their workforce in December, citing improved production efficiency and reduced backlogs. The survey revealed that backlog depletion was at its fastest pace in 13 months, allowing firms to lower payroll costs.
Baluch expressed optimism about the future, suggesting that the job cuts might be temporary if demand continues to grow as anticipated in 2025. “Resilient demand could prompt manufacturers to revisit their hiring plans,” she added.
The report highlights the sector’s resilience amid economic challenges, with manufacturers benefiting from favorable market conditions. However, the lack of job growth underscores the need for policies that ensure manufacturing gains translate into broader employment opportunities.
As the Philippines enters 2025, maintaining demand momentum and addressing employment gaps will be key to sustaining the sector’s growth and ensuring its benefits are widely felt.
