The Federation of Philippine Industries (FPI) chairperson Elizabeth Lee on Wednesday, July 1, 2026, expressed optimism for the continued expansion of the country’s manufacturing sector, despite challenges from external developments and the recent wage hike.
PMI expansion signals growth
Lee highlighted the S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) rising for the second consecutive month in June to 50.9 from 50.8 in May. “We have two months of expansion and we are looking forward to a stronger positive trend given that the production volume also was relatively resilient with a positive 12 percent growth in April,” she said.
According to Lee, “new orders and output grew, export order declines eased, and input cost inflation moderated.” However, she noted that “still, business confidence is at a relatively low level given global uncertainties affecting supply chain disruptions and rise in input costs.” She added, “Businesses are weighing the cumulative toll of recent cost pressures.”
Wage hike adds to manufacturer burdens
On Tuesday, June 30, the Department of Labor and Employment announced the approval by the National Capital Region Regional Tripartite Wages and Productivity Board of an P85 increase in the daily minimum wage to P780. The wage hike will be implemented in two tranches: P60 effective July 19, 2026, and an additional P25 effective January 20, 2027.
Lee acknowledged the legitimacy of the wage adjustment, stating, “We recognize the legitimate basis for the wage adjustment: the cost of living for workers has genuinely risen, and the wage board acted within its mandate. At the same time, this increase compounds with other pressures already weighing on manufacturers this year – elevated energy and logistics costs, tighter financing amid continued BSP monetary policy, and global trade uncertainty. We must keep that in mind.”
Impact on MSMEs and need for balanced policy
While the wage hike benefits workers, Lee said it will impact the productivity and sustainability of micro, small and medium enterprises (MSMEs). She emphasized that policy must consider the cumulative costs businesses face, as each adjustment cannot be viewed in isolation.
“We welcome the staggered implementation as a reasonable way to ease the transition, and we urge continued dialogue grounded in data, mindful of regional differences, and attentive to employment impact,” Lee said. “June’s PMI uptick shows Philippine manufacturing can still grow under pressure. However, sustaining that growth means supporting workers while preserving businesses’ ability to invest, employ, and compete. We cannot treat one factor in isolation.”
