Unemployment rate steadied in December

The country’s unemployment rate steadied in December amid seasonal services gains and construction sector job losses likely caused by the impact of a corruption scandal, data from the Philippine Statistics Authority (PSA) showed on Friday.

At 4.4 percent, the jobless rate was unchanged from November but worsened from December 2024’s 3.1 percent. This translated to 2.26 million unemployed Filipinos, higher than the 2.25 million and 1.63 million recorded a month and year earlier.

The administrative and support service, and accommodation and food service industries added the most number of jobs at 385,000 and 280,000, respectively, the PSA data showed, likely reflecting holiday demand.

Construction, and transportation and storage, on the other hand, shed 550,000 and 258,000 positions. Chinabank Research said the former’s losses were likely due to “a sharper reduction in government outlays on infrastructure projects in the fourth quarter last year, which constrained project implementation.”

“Job creation in the sector may remain subdued as heightened scrutiny amid governance concerns may continue to delay public construction activities,” it added.

The Department of Economy, Planning and Development (DEPDev) said the government was committed to improving the labor market situation amid “global and domestic issues.”

Economic Planning Undersecretary Rosemarie Edillon said the government would resume and fast-track delayed infrastructure projects and prioritize implementation of high-impact programs in key sectors.

The DEPDev noted a decline in the labor force participation rate to 64.4 percent from 65.1 percent a year earlier and also tagged higher youth unemployment (12.2 percent from 9.1 percent) and a rise in the share of workers that have stopped actively seeking employment (7.3 percent from 6.3 percent).

“[W]e will prioritize employment creation by restoring consumer and business confidence, reduce the cost of doing business, encourage innovation, and expand training and reskilling opportunities,” Edillon said.

Chinabank Research said the latest labor force survey results point to “a softening job market, as subdued domestic consumption likely weighed on labor demand.”

“However, job prospects may improve this year, supported by early signs of stronger manufacturing activity and a possible rebound in public construction,” it added.

Still, underemployment — which counts those looking for more work or an extra job — declined to 8.0 percent, down from 10.4 percent and 10.9 percent a month and year earlier, respectively.

The number of underemployed individuals stood at 3.93 million in December, down from 5.11 million a month earlier and 5.48 million in December 2024.

“The decline in underemployment allows workers to participate in the upskilling and reskilling initiatives to be rolled out by [the] government,” Edillon said.

Wage and salary workers accounted for the bulk of the employed at 64.2 percent of the total. Following were the self-employed (27.4 percent), unpaid family workers (6.9 percent) and employers in family-operated farms or businesses (1.5 percent).

Private companies employed 77.7 percent of wage and salary workers or 49.4 percent of the total number of employed persons. The government and state-owned firms, in comparison, held a combined wage and salary worker share of 15.2 percent and 9.8 percent of total employment.

Source: Manila Times

Growth rebound seen; structural changes urged

Philippine economic growth will likely rebound this year after a marked slowdown in 2025, a brokerage firm said, lifted by a recovery in public infrastructure spending and the impact of interest rate cuts.

Philstocks Financial Inc. said 2026 growth could hit 5.0 percent — at the bottom end of the government’s 5.0- to 6.0-percent goal for the year — but also warned of risks from an inflation uptick and weaker exports.

State spending, which slowed last year as a flood control project scandal unfolded, was forecast to recover as a result of governance reforms while consumption — also affected by the corruption mess — is expected to strengthen as policy rate cuts work their way through the economy.

Remittances from Filipinos working abroad will also provide support to consumer spending and residential investments, Philistocks said.

This will likely be supported by a weaker peso, which is expected to average at P59.5 to the dollar — a new record low — amid a continued balance of payments deficit and lingering investor concerns.

Inflation, which averaged 1.7 percent last year, is projected to accelerate to 3.2 percent in 2026 — within the 2.0- to 4.0-percent target — due to stronger demand, higher food prices and the weaker peso.

The Bangko Sentral ng Pilipinas, which has lowered key interest rates by 200 basis points beginning August 2024 as inflation returned to target, is expected to order another cut this year to boost economic growth.

Philstocks said the economic rebound will also be seen in the stock market, with the benchmark Philippine Stock Exchange index (PSEi) expected to hit the 7,100 level after languishing in the low 6,000s last year.

The 2026 recovery will be supported by robust corporate fundamentals and an estimated 15-percent earnings growth among index members, the brokerage said.

It noted that as of January 30, 2026, the PSEi was trading at a price-to-earnings ratio of 10.5 times, well below its five-year average of 14.4x and the regional average of 19.0x, indicating that local stocks remained at attractive levels.

Sector-wise, Philstocks expects residential property developers, banks, consumer companies and nickel miners to benefit from low interest rates, improving labor market conditions and potential gains in global nickel prices.

As this developed, an economist said that boosting the economy was not just about increased consumption and spending but expanding the sources of growth.

“There should be a wider discussion on the structure of the economy,” Bank of the Philippine Islands lead economist Emilio Neri said in a commentary.

“The country cannot remain overly reliant on a narrow set of growth drivers such as consumption and government spending.”

The limited set of growth sources was highlighted last year by the corruption scandal and the vulnerability was also evident during the Covid-19 pandemic, he said.

“For many years, the Philippine economy has been heavily reliant on consumer spending, supported by remittances and the BPO (business process outsourcing) sector,” Neri said.

“When the pandemic hit, the economy contracted sharply as lockdowns severely disrupted consumption,” he added, noting that countries like Vietnam, with more diverse growth drivers, were better able to withstand the shock.

The same pattern was said to be showing now with growth largely due to household spending.

“[T]he slowdown would likely not have been as severe if the economy had other strong engines of expansion beyond consumption,” Neri said.

“Even with the sharp decline in government construction spending, growth might have been more acceptable if the production sectors had been in a stronger position to offset the drag, specifically agriculture and manufacturing,” he added.

“Greater emphasis must therefore be placed on strengthening production sectors such as agriculture, manufacturing, and construction, supported by high-quality infrastructure that enhances the economy’s ability to produce.”

“The economy remains strong on the demand side, but it is still unable to produce a significant portion of what it consumes,” he noted.

Quality of spending will also be critical for a recovery this year.

Neri said growth could stay weak in the first half of 2026 but rebound in the second half, with full-year growth likely to hit 5.1 percent.

He added that the weak growth reading has also raised the chances of more Bangko Sentral rate cuts.

“With growth likely to remain weak in the first half of 2026, another cut could follow after a potential move in February, especially as inflation is expected to remain within target,” Neri said.

Source: Manila Times

Philippine growth slumps to 4.4% in 2025

Philippine economic growth sharply slowed to a post-pandemic low in the fourth quarter of 2025 as the flood control scandal continued to weigh on government spending, investments and consumer spending, dragging full-year expansion below target for the third straight year.

The Philippine Statistics Authority (PSA) reported on Thursday that the fourth-quarter gross domestic product (GDP) expanded by 3%, from 5.3% in the fourth quarter of 2024 and the revised 3.9% print in the third quarter of 2025.

The slowdown came as a surprise as the fourth quarter is typically a strong period for growth, thanks to holiday spending. The latest print stands out as the weakest fourth-quarter performance in five years or since the 8.2% contraction in the fourth quarter of 2020.

Excluding the pandemic period, it was the worst quarterly growth rate in 16 years or since the 1.8% in the fourth quarter of 2009, but matched the 3% in the third quarter of 2011.

On a seasonally adjusted quarter-on-quarter basis, the economy grew by 0.6%.

In 2025, the economy expanded by 4.4%, much weaker than the 5.7% growth in 2024.

This was the weakest pace in five years or when GDP declined by 9.5% in 2020.

Excluding the pandemic, it was the slowest growth since the 3.9% expansion in 2011.

The full-year average also fell below the Development Budget Coordination Committee’s (DBCC) 5.5%-6.5% goal.

Economy Secretary Arsenio M. Balisacan said the slower growth reflected the impact of adverse weather on economic activity and the corruption scandal on consumer and investor sentiment.

“Admittedly, the flood control corruption scandal also weighed on business and consumer confidence. These challenges unfolded alongside lingering global economic uncertainties,” he said.

Mr. Balisacan, who earlier expected full-year growth to come in at 4.8-5%, said he did not expect such a “sharp” slowdown. However, he said economic managers had expected there would be consequences for the reforms that were put in place in the aftermath of the graft scandal.

“It cannot be business as usual. Because otherwise, we may have growth this year, or last year, growth may be higher, but with corruption all over the place, or in infrastructure. That (growth) would not be expected to last. We would better have a slowdown, correct the problems, and build the trust of our people in the government,” Mr. Balisacan said.

A scandal linking government officials, lawmakers and private contractors to multibillion-peso corruption in flood control projects had dragged government spending and household consumption since the third quarter last year.

WEAK CONSUMPTION

In the fourth quarter, household consumption, which accounts for over 70% of the country’s GDP, rose by 3.8%, slowing from 4.7% a year ago and 4.1% in the third quarter. This was the slowest household spending growth since the -4.8% seen in the first quarter of 2021.

For the full-year, consumption growth slowed to 4.6% from 4.9% in 2024.

Meanwhile, government spending grew by 3.7% in the fourth quarter, weakening from 9% in the same period in 2024 and 5.8% in the third quarter. It was also the slowest since 2.6% in the first quarter of 2024.

Of the total, state expenditures in construction declined by 41.9% during the last three months of 2025, as the government increased scrutiny over infrastructure projects.

In 2025, government spending grew by 9.1%, faster than 7.3% in the previous year.

Mr. Balisacan said the government’s catch-up plan could help boost public spending, particularly construction, in the first quarter.

“The release of the approval of the budget for 2026 was delayed a bit,” he added. “And so that could also have a negative effect on spending, particularly for public construction.”

PSA data also showed that the country’s gross capital formation, the investment component of the economy, declined by 10.9% in the fourth quarter, the biggest drop since early 2021. This was a steeper decline than the -2.8% in the third quarter and a reversal from the 5.5% growth in the fourth quarter of 2024.

For 2025, investments fell by 2.1%.

BETTER EXPORTS

Meanwhile, exports growth provided some relief for the economy as it climbed by 13.2% in the fourth quarter, from 3.2% a year earlier and 7.4% in the third quarter. For the entire year, exports grew by an annual 8.1%.

Imports, meanwhile, expanded by 3.5% in the October-to-December period, from 2.7% in the previous year and 3.2% in the previous quarter, bringing its full-year growth to 5.1%.

The government forecasts goods exports and services exports to rise by 2% and 5%, respectively, this year.

According to the PSA, the agriculture, forestry, and fishing (AFF) sector posted 1% growth in the fourth quarter, while services expanded by 5.2%. However, the industry sector saw a 0.9% contraction in the fourth quarter.

In 2025, the AFF, services and industry sectors grew by 3.1%, 5.9%, and 1.5%, respectively.

National Statistician Claire Dennis S. Mapa said wholesale and retail trade and repair of motor vehicles and motorcycles were the top contributors to the country’s expansion.

Meanwhile, the Philippines’ gross national income went up by 3.9% in the fourth quarter. By yearend, it rose by 6.1%, easing from 7.7% in 2024.

The country’s net primary income likewise increased by 10.9% in the October-to-December period, bringing the 2025 average to 19.1%. This slowed from 26.6% in the prior year.

DELAYED RECOVERY

Meanwhile, Mr. Balisacan said the country’s chances for an early rebound might now be lower.

“(W)e see 2026 as a rally point for us,” he said. “And with all these developments taking place and our chairmanship of the ASEAN (Association of Southeast Asian Nations), it should be able to turn the corners around and get the economy back on its track as early as the… second quarter of this year.”

He noted that the lingering effects of the corruption mess and the delayed approval of the 2026 budget could prevent the economy from recovering in the first quarter of the year.

“We don’t expect that growth will recover to its peak in the first quarter because we expect some still lingering effects of those measures, especially that the budget for this year was released or was approved late,” he said.

On Jan. 5, President Ferdinand R. Marcos, Jr. signed the 2026 General Appropriations Act, allotting a P6.793-trillion budget for the government.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said the economic lags experienced in the fourth quarter may continue to spill over to the country’s near-term growth prospects.

“All this weakness looks set to bleed into the early part of this year, as we’ve yet to see any bottoming-out in government infrastructure spending in the monthly numbers, while surveyed expansion plans in the private sector continue to roll over sharply,” Mr. Chanco said.

The outlook for the Philippine economy remains dim, especially if persisting governance issues will be left unresolved, ANZ Research Chief Economist for Southeast Asia and India Sanjay Mathur noted. 

“Looking forward, growth is likely to remain weak until governance-related issues are resolved, and public spending begins to improve,” he said in a report. “While support from net exports will likely be sustained over the next few months due to the AI (artificial intelligence)-related technology cycle, its overall impact will be limited.”

Meanwhile, Chinabank Research said the economy’s underperformance in the fourth quarter calls for a more urgent implementation of reforms, adding that the global uncertainties endanger the country’s external position. 

“This underscores the need to further weather-proof the economy and quickly rebuild public confidence to support domestic demand, especially since the external front faces persisting headwinds from a highly uncertain and volatile global environment,” it said.

This year, the DBCC is targeting 5%-6% GDP growth.

Source: Business World