Among industries affected by the onset and progression of the COVID-19 pandemic, the Philippine manufacturing sector’s experience was one of the most mixed. The general decline in economic activity and consumers’ survival-centric spending behavior led to a decrease in demand for non-essential goods at various stages of manufacture and finish. It took at least a year for there to be signs of renewed interest among consumers to purchase these goods in significant quantities.

Essential processed goods and disinfection supplies, however, initially came into more demand as consumers engaged in different levels of panic buying. As the new safety-oriented status quo was established, demand for these products settled into consistent levels and thus the urgency for manufacturers to fill it in leveled off.

The trend can thus be described as follows: manufacturers of essential goods and disinfection supplies enjoyed a momentary boom that transitioned into sustained demand, while manufacturers of non-essential goods saw a decline in demand that lasted more or less an entire fiscal year before giving way to slow recovery.

By the first half of 2022, the situation had been through significant change. S&P Global latest press release on the Philippine manufacturing industry made available in June 2022 provided insight on its Purchasing Manager’s Index (PMI) and illustrated the state of the sector.

The press release reported that manufacturing demand as a whole peaked in April 2022 and slightly fell in June 2022, as indicated by the PMI falling from 54.3 to 54.1 within said period. However, this was not seen as significant enough to indicate a downward trend, and the outlook for the PMI remained optimistic in counting this as a sign of future growth.[1]

Also, active manufacturing workforce numbers saw a moderate overall increase and was at its highest since February 2020.[2] Job creation in the sector plateaued between April and May 2022[3], indicating that while firms are not looking to expand their workforce, they are making progress towards filling vacancies that may have been caused or even necessitated by the pandemic.

The forecast

Despite its growth having slowed down to a more consistent rate, demand for manufacturing is still generally increasing among businesses across a diverse range of industries. This is poised to create steadily increasing income streams. In order to have the workforce needed to meet output targets and deadlines, the manufacturing sector is expected to at the very least maintain its current sustained job creation rate.

What does this mean for the manufacturing industry?

Manufacturing will continue to be vital to economic recovery, with demand for the production of all types of goods projected to continue rising to match increased business activity among wholesalers and retailers. On the whole, this represents a normalizing and stabilizing influx of new and additional business for the sector, translatable into sustained revenue.

Whether or not the trend will continue in an upward direction remains to be seen as the pandemic is still very much affected by the adaptable nature of the virus, but the Philippine economic community is keen to reopen and make greater progress towards recovery.

Due to the recovering economy, consumers are now also more willing to spend on non-essential goods. This behavior has been steadily building since the first wave of pandemic protocol relaxation, and was exhibited during observances and holidays.

Thus, the projection is that industries and consumers will continue to operate and behave in a combined way that creates opportunities for the manufacturing sector.

To meet this steadily normalizing demand and support the stabilizing of the economy, manufacturers will need to ensure that they are operating at full (or as close to full) capacity moving forward. To accomplish this, they will be actively replenishing their ranks at all levels to ensure the steady flow of all stages of their operations.

This all means that the manufacturing sector has strong but limited potential to aid employment while having greater potential to attract business.

Moving forward, the Philippines’ economic situation will continue to pose challenges to recovery efforts. As all industries and the businesses within them are reliant on various goods to some extent, manufacturing will prove to be a cornerstone of economic activity for the foreseeable future. And to serve as such a foundation, the sector will need all hands on deck.

[1][2][3] S&P Global. S&P Global Philippines Manufacturing PMI®. Edition released 1June 2022. Retrieved 6 June 2022 from https://www.pmi.spglobal.com/Public/Home/PressRelease/7f601322f8d24fc995287821eeacf0c5