By Isa Jane D. Acabal, Researcher
Factory production rose to a four-month high in December due to a rapid increase in the production of other non-ferrous mineral products, food products, and a recovery in machinery and equipment, the Philippine Statistics Authority (PSA) reported on Friday.
The first results of PSA’s Monthly Integrated Survey of Selected Industries showed manufacturing output, as measured by the volume of production index (VoPI), increased by 1% year-on-year in December, faster than a gain of 0.5% in December 2024.
However, this was a reversal from the revised 1.1% decline in November.
The latest output growth was the fastest pace in four months or since the 1.3% increase in August 2025.
In 2025, factory output decreased by 0.02%, which is a result of the average annual growth of 0.7% seen in 2024.
On a monthly basis, December output rose 0.7% from a 2.3% decline in November. Excluding seasonal factors, it grew by 4.2%.
In comparison, the S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) increased 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 in the production of non-ferrous mineral products (31.4% in December from 6% in November), food products (10.4% from 7.6%), and stabilization of non-electrical machinery and equipment (10.1% from 10.7%).
Twelve other industrial categories posted increases, while seven decreased.
According to PSA, the top three industrial categories that contributed to the year-on-year growth of manufacturing VoPI 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 strong production in food products, non-metallic minerals, and increased machinery and equipment shows how both consumer demand and business investment are helping to 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 at the University of Asia and the Pacific, said the recovery in VoPI manufacturing in December could be due to “seasonal effects.”
“Manufacturers are likely to increase production of food products for the holidays, as well as intermediate building materials and machinery as businesses are set to increase costs (capital expenditure) in 2026,” he said.
He added that strong demand for exports is likely to stimulate more manufacturing jobs.
In December, exports rose 23.3% year-on-year to $6.99 billion from 21.6% growth in November. This was a change from 1.9% in December 2024.
This was the fastest pace of exports in six months, up from 26.9% growth in June 2025.
“A quick read, although still positive, inflation may at least indicate mild inflation this year, allowing firms to plan ahead accordingly,” said Mr Agonia.
Inflation rose to 1.8% in December, up from 1.5% in November but down from 2.9% in December 2024.
This reduced the full-year average to 1.7% in 2025 from 3.2% in 2024.
This was the slowest rate in nine years or since an average of 1.3% in 2016 but was slightly above the central bank’s target of 1.6% for 2025.
The Bangko Sentral ng Pilipinas lowered borrowing costs by another 25 basis points in December, bringing the key policy rate to 4.5%.
According to Mr. Agonia, the rate cut “is likely to have little impact” on December output because it usually takes at least two years to “work fully into the financial system.”
For Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion, the central bank’s accommodative monetary policy helped to ease financial conditions amid negative inflation.
“Lower borrowing costs have given firms more room to manage operating costs, support production decisions and sustain production,” he said.
Mr. Asuncion expects moderate growth in manufacturing output this year “as supported by the accommodation policy and strong consumer demand.”
PCCI Honorary Chairman Sergio R. Ortiz-Luis, Jr. He also sees an improvement in production this year.
“Speculation [on factory output] this year, at the beginning of this year, it will continue to rise. Not in a big way, but it will be good,” he said on the phone.
Mr. Agonia expects a “slight improvement” in manufacturing performance this year as business sentiment recovers from the recession in the fourth quarter and full year 2025.
“However, any significant changes from the status quo would require concerted efforts to improve the conditions of the manufacturing sector,” he said.
Gross domestic product (GDP) grew by 3% in the fourth quarter of 2025, down from 5.3% in the same period in 2024 and a revised print of 3.9% in the third quarter of 2025.
This brought annual economic growth to 4.4%, missing the government’s target of 5.5% to 6.5%.
The latest annual GDP print was relatively slow compared to growth of 5.7% in 2024 and was the weakest growth since a decline of 9.5% in 2020.
December capacity utilization, or the rate at which industry resources are being used to produce goods, averaged 77.5% in December, above the revised 77.4% in November and 76.1% posted in the same month in 2024.
Looking ahead to 2026, Mr. Ferrer said PCCI remains “cautiously optimistic.”
“Continued government infrastructure projects, strong local consumption, and supportive fiscal policy should help drive growth. At the same time, challenges such as rising global prices, supply chain issues, and energy costs must be addressed,” he added.
