ASEAN manufacturing sector shows continued growth in April

New orders rose for the second straight month in April, the rate of growth quickening to the strongest since mid-2023. However, the data suggested that the latest upturn was primarily driven by domestic demand as the current downturn in export sales stretched to 23 successive months. In terms of output, while ASEAN manufacturers signalled solid growth in production, the upturn moderated from the ten-month high recorded in March.

The impact of cooling production growth resulted in a slower increase in purchasing activity. Reflective of this, holdings of pre-production items were accumulated at only a marginal pace. More concerning was the fall in manufacturing employment, the first seen since last October. The downturn, while modest, was the most severe since November 2021. The drop in staffing levels was recorded despite capacity pressures continuing to build, with backlogs rising at a quicker pace, as per S&P Global.

Cost burdens rose sharply, but the rate of inflation eased to a six-month low. Charges were raised at a muted pace, with the rate of increase broadly in line with the eight-month low seen in March.

Lastly, ASEAN manufacturers expected growth in output in the coming 12 months. That said, the level of confidence was the joint weakest since July 2020, equal with that seen in July last year.

Country specific data noted improvements in manufacturing conditions across four of the seven ASEAN constituents, with Indonesia replacing Singapore at the top of the rankings table. Meanwhile, Thailand signalled the strongest deterioration in operating conditions for the second time in the past three survey periods.

“The ASEAN manufacturing sector remained in growth territory at the start of the second quarter of the year. New orders rose at a quickened pace, signalling a further improvement in demand trends. Growth in output remained solid overall, despite the upturn easing slightly,” said Maryam Baluch, economist at S&P Global Market Intelligence.

Fibre2Fashion News Desk (DP)