Feb. manufacturing output rises to 8-month high

MANUFACTURING output growth expanded to an eight-month high in February, driven by sustained local demand, with a boost provided by the US Supreme Court’s cancellation of impending tariffs that month, analysts said.

However, the analysts warned that demand for domestically manufactured products may dim in the medium term as volatile economic conditions dampen the growth outlook.

Citing preliminary data, the Philippine Statistics Authority (PSA) said its Monthly Integrated Survey of Selected Industries indicated that manufacturing output by volume of production index (VoPI) grew 3.2% year on year in February.

This reversed the downwardly revised 2% decline in February 2025 and exceeded the upwardly revised 1.3% expansion in January.

The 3.2% reading was also the strongest since the 3.4% logged in June 2025.

The February indicator marked the 10^th straight month the VoPI was in positive territory.

The performance of manufacturing was also reflected in the S&P’s Purchasing Manager’s Index, which returned a reading of 54.6, an eight-year high for the month.

PMIs reflect companies’ raw material orders and are a leading indicator for future manufacturing activity. A reading above 50 on a PMI signals heightened manufacturing activity going forward, while a reading under 50 indicates deterioration.

 Meanwhile, capacity utilization in February dipped to 77.5% compared with the 77.8% posted in the previous month. However, it was higher than the 76% logged a year earlier.

Marco Antonio C. Agonia, an economist at the University of Asia and the Pacific, said in an e-mail that VoPI growth in February was reflective of “base effects and broadly improved demand conditions.”

The PSA attributed the VoPI reading that month to upticks in subindices for basic metals (18.7% in February from a 6.1% decline in January), food (3.4% from 1.5%), and computer electronic and electrical parts (16.5% from 19.4%).

Philippine Chamber of Commerce and Industry Honorary Chairman Sergio R. Ortiz-Luis, Jr., said by telephone that the continued growth in manufacturing activity up to February may have been due to spillovers of orders from the December holidays.

Mr. Agonia, added that the manufacturing of metals may have jumped as gold miners took advantage of elevated prices of precious metals in that month.

He said food and beverage production were boosted by domestic and export demand.

“We saw evidence from the same month’s capital goods imports that businesses may have been riding a wave of optimism in February, leading to more orders for the manufacturing sector,” Mr. Agonia added.

Among the remaining 19 subindices, 10 more posted growth in that month while nine declined year on year.

Mr. Agonia said foreign demand for Philippine-made goods may have been driven by the US Supreme Court’s move to block President Donald J. Trump’s tariffs.

Mr. Trump initially declared his intent to impose tariffs not less than 10% on all imports from US trading partners on Feb. 1.

In a later threat, he proposed a blanket rate of 15%, which would have been lower than the 19% rate imposed on Philippine-made goods in August 2025.

However, on Feb. 23, the US Supreme Court ruled that Mr. Trump exceeded his authority to “regulate” the tariffs on exports to the US.

“Global supply chains took advantage of lower tariffs and thus securing supplies ahead of potential tariff policy uncertainty,” Mr. Agonia added.

Both analysts said that the rising tensions between US and Iran did not affect Philippine manufacturing that month.

However, both acknowledged the now-active war as a negative catalyst to production in the following months.

The first attacks on Iran were launched by the US and Israel on Feb. 28.

Since then, fuel prices have gone through multiple rounds of increases amounting to P100.05 per liter for diesel, P52.30 for gasoline, and P82.40 for kerosene.

“Without the Iran war, I would have said that [growth in manufacturing] would have continued on its trend,” Mr. Ortiz-Luis said.

Mr. Agonia added that the current conditions may “dim” the demand for Philippine goods as companies rein in their spending plans until the conflict subsides and oil price pressures ease.

“We see softer manufacturing output performance on the horizon, as the macroeconomic shocks of the Middle East war ripple through the global economy,” Mr. Agonia said. — Matthew Miguel L. Castillo