Manufacturing conditions in ASEAN region improved in September: Report

Companies signalled steeper increases in output, new orders, purchasing activity, and employment, while business confidence remained historically strong as per the latest S&P Global PMI data. Furthermore, the rate of expansion was the quickest seen since October 2021 and solid overall.

Five of the seven constituent ASEAN nations recorded improvements in the health of their respective manufacturing sectors in September. As has been the case in each of the past ten months, Singapore registered the strongest improvement in operating conditions overall (PMI at 58.5), and one that was quicker than seen in August. Thailand’s manufacturing PMI meanwhile hit its highest since data collection began in December 2015 (55.7), and Indonesia registered the strongest improvement in the health of its manufacturing sector for eight months (53.7).

In the Philippines, the headline PMI strengthened to a three-month high (52.9) and pointed to a solid rate of growth. In Vietnam, manufacturing conditions improved at a modest pace that was similar to that seen in August (52.5). Myanmar and Malaysia bucked the overall trend, and recorded deteriorations in manufacturing conditions during September.

In Myanmar, the headline PMI dropped to a 12-month low and was consistent with a sharp decline in the health of the goods producing sector (43.1). While the rate of contraction in Malaysia was only slight, it marked the first deterioration in conditions since March (49.1).

Firms across the ASEAN manufacturing sector registered sharp and accelerated increases in production and new business at the end of the third quarter. Notably, the rates of expansion were the quickest seen since both output and sales returned to growth last October 2021.

Improved demand conditions and increased production schedules led firms to expand their payroll numbers for the third month in a row. Though modest, the rate of job creation was the quickest seen since the series began in July 2012. Purchasing activity meanwhile expanded at an unprecedented rate in September. However, inventories of purchases increased at only a marginal pace that was similar to that seen in August. Inventories of finished goods, however, expanded at the steepest pace since the survey began over a decade ago.

Average suppliers’ delivery times meanwhile continued to increase across the region. The rate at which lead times lengthened quickened on the month, but remained moderate overall and less severe than the delays seen at the start of the year. Inflationary pressures continued to soften, according to latest survey data. Average input costs increased at the joint-slowest rate for a year (on a par with February), while prices charged inflation dipped to a seven-month low. Nevertheless, rates of growth remained sharp by historical standards.

When assessing the 12-month outlook for production, ASEAN manufacturers retained an optimistic stance in September. The overall level of positive sentiment was unchanged from that recorded in August, which marked the highest degree of confidence since November 2016.

“Business conditions across the ASEAN manufacturing sector improved at the quickest rate for nearly a year in September, supported by sharper increases in new orders and output,” Annabel Fiddes, economics associate director at S&P Global Market Intelligence, said in a press release by S&P Global. “However, signs of slower global economic growth, tightening financial conditions, and strong inflation rates worldwide could weigh on prospects in the coming months. Notably, the new export orders sub-index for the ASEAN manufacturing sector remained in negative territory during September.”

Fibre2Fashion News Desk (NB)