MANILA — Philippine factory activity returned to expansion in December 2025, signaling a modest improvement in the sector after recording its sharpest contraction in four years a month earlier, according to a survey released Friday by S&P Global.

The S&P Global Philippines Manufacturing PMI stood at 50.2 in December, above the 50.0 threshold separating expansion from contraction, reflecting an improvement from the 47.4 recorded in November, which marked the steepest drop since August 2021.

“December PMI data signalled a slight improvement in operating conditions in the Filipino manufacturing sector, an encouraging move from the solid deterioration seen in the month prior,” said Maryam Baluch of S&P Global Market Intelligence.

New order volumes grew for the first time since August, ending a three-month period of contraction, with growth the most pronounced since April.

“New order volumes rose for the first time in four months, which helped partly ease the ongoing downturn in production. Fuelled by this positive direction, companies increased their purchasing activity for the first time since September, while the labour market showed signs of stabilising,” Baluch added.

Purchasing activity for December rose for the first time in three months, marking the fastest pace since August and allowing companies to better manage inventory levels. Holdings of pre-production items were unchanged month-on-month, while stocks of finished goods increased. Firms also reported growth in post-production inventories in anticipation of future demand.

Despite the improvement, optimism declined from the 12-month high recorded in November. Baluch noted that the sector’s growth is primarily driven by domestic demand, as sharply declining export conditions limit broader expansion.

Survey responses were collected in the second half of December from purchasing managers in a panel of around 400 manufacturers. The PMI is a weighted average of new orders, output, employment, suppliers’ delivery times, and stocks of purchases.

The Philippine Statistics Authority (PSA) is scheduled to release official government manufacturing figures for December on Feb. 6, 2026.