Weak factory growth threatens PH consumption engine 

MANILA, Philippines — The Philippines’ weak manufacturing sector is limiting wage growth and putting consumer spending at risk, Oxford Economics said on Wednesday.

In a note, the research firm said Philippine manufacturing has lagged the region, while recent wage gains have relied on one-off minimum wage hikes instead of productivity and employment growth.

READ: Philippine factory activity edges up in June

A stronger manufacturing and export sector could lift household incomes through job creation, higher wages and bonuses, as well as dividends and stock-based compensation, Oxford Economics said.

But in the Philippines, Oxford Economics said the recent wage growth is unlikely to prove durable without a stronger, broad-based manufacturing recovery.

“What’s more after spending beyond their disposable income during the post-pandemic recovery, Filipino households have used part of their recent income gains to rebuild financial buffers,” it added.

Manufacturing output grew just 0.5 percent in the first quarter, slowing from 1.8 percent in the previous three months, government data showed. Consumer spending, which typically accounts for about 70 percent of gross domestic product, also eased to 3 percent growth from 3.8 percent in the previous quarter.

READ: ING: PH trails Asia in consumer recovery

The slowdown came as the Philippine economy expanded just 2.8 percent in the first three months of 2026, its weakest quarterly growth since the pandemic.

Asia’s AI gains bypass consumers

Across Asia, Oxford Economics said the artificial intelligence boom has delivered major gains for the region’s technology and electronics industries, but those benefits have largely bypassed households. Despite a surge in electronics exports over the past two years, consumer spending has failed to keep pace, it said.

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The firm said the weak pass-through to consumption reflects three factors: AI-related manufacturing employs only a small share of workers and has created few additional jobs; real wage growth has generally lagged output gains; and relatively low household stock ownership has meant little spending support via wealth gains.

Back home, Oxford Economics said a rebound in public investment and recovering remittance inflows should support spending, though elevated inflation – among the highest in the region – is keeping the near-term outlook subdued. /pai INQ