AN ECONOMIST is optimistic for the continued expansion of the Philippines’ manufacturing sector amidst the challenges posed by the United States’ tariff policy, citing the resiliency of domestic consumption and the impact of the Bangko Sentral ng Pilipinas’ (BSP) rate cuts.
The Philippines’ S&P Global Manufacturing Purchasing Managers Index (PMI) for October 2025 improved to 50.1 points, from the month-ago’s 49.9 points, which Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort traced to improvement in weather conditions and effects of the US government’s tariff hikes, among others.
An index of 50 and up indicates expansion, while an index of below 50 indicates contraction.
Ricafort, in a report dated Nov. 3, noted that although the October index is lower than the year-ago’s 52.9 points, the latest figure still shows an improvement due in part to the consumer-driven domestic economy, with consumer spending accounting for around 75 percent of gross domestic product.
He said the Philippines’ less reliance on exports as a growth driver, compared to other countries in the region, provides additional cushion to the domestic economy, he said.
Reduction in the BSP’s key rates, which have been slashed with a total of 100 basis points this year alone, is also a plus for the manufacturing sector since this lowers cost among
manufacturers, he said.
Ricafort, when asked for his full-year forecast, expressed hope that the recent improvements will be sustained, with the end-2025 PMI seen to remain in expansion mode “at above 50, based on the consistent patterns in recent years.”
“(This is) consistent with the fact that manufacturing capacity utilization has been among pre-pandemic highs at above 77 percent; also in view of the seasonal increase/peak in sales/demand for many local businesses/industries during the fourth quarter, especially Christmas holiday-related spending,” he told the Philippine News Agency.
The BSP rate cuts, the last of which so far is the 25 basis points last Oct. 9, are also seen to boost new investments and expansion projects.
Although these factors will likely be countered by the United States’ tariff policies and its impact on global economic growth, Ricafort said possible Fed (Federal Reserve) rate reductions “could be matched locally.”
On Oct. 29, the Federal Open Market Committee reduced for the second straight meeting the Fed Funds Rate by another 25 basis points, bringing the rate to between a range of 3.75 percent to four percent, the lowest in three years, citing developments in the labor market. / PNA