The purchasing managers’ index (PMI) for manufacturing in Southeast Asia largely declined.
The PMI scores for the Philippines (50.8), Vietnam (51.2), Myanmar (46.5), and Singapore (50.1) have fallen, with corresponding declines of 3.0, -2.8, -1.7, and -0.2. According to Sandamp;P Global PMI, Myanmar is the only nation among its peers to have a score below 50.
Thailand (52.4), which gained 1.7 points, outperformed its peers the best, followed by Indonesia (51.3, which gained 1.1 points), Malaysia, and (50.6, 0.2).
An economist from Sandamp;P Global Market Intelligence named Maryam Baluch said, “The most recent PMI data showed continued expansion in the ASEAN manufacturing industry, with the most recent number rising from June’s three-month low. Production and sales quantities increased as demand circumstances improved and pandemic limitations loosened. Furthermore, a slight rise in staffing levels was caused by escalating business demand.”
With the exception of Myanmar, the state of each country’s manufacturing sector improved overall in July. In both the Philippines and Vietnam, there were slowdowns, with the most recent improvements being the weakest in six and ten months, respectively.
“Additionally, despite slightly lessening month-over-month, pricing pressures are still consistently high. Central banks in the region are likely to adopt stricter monetary policies in response. As the COVID-19 shocks diminish, this might potentially have an impact on the pace of growth and demand in the upcoming months “Added she.
Data from the Sandamp;P Global PMI. compiled in August 2022 by DIGITIMES Asia.
MANUFACTURING CONDITIONS HAVE BEEN IMPROVED IN THAILAND AT A NEAR-RECORD RATE. According to the most recent Sandamp;P Global PMI statistics, Thailand’s manufacturing sector not only had the second-strongest improvement in circumstances in history during July, but also a seventh straight month of improving business conditions.
Due to a significant increase in output, conditions overall improved in July.
After a two-month fall in volumes, there was a rise in stock orders in July. According to reports, this is related to a rise in customer demand. Overall, the rate of growth remained modest at a fractional percent. A consistent increase in new export orders to Thai industries in July indicated that the foreign demand had also increased.
In other areas, capacity was under more stress in July, and the rate of backlog reduction was among the fastest on record. According to the panel, there has been a meager pipeline of new work that is currently available. Due to this, businesses were able to reduce employment in July while also reducing backlogs. This led to cost reductions as well. However, delays in delivery are brought on by transportation problems and supplier capacity constraints.
The twenty-second consecutive month of rising input prices contributed to the ongoing difficulties faced by Thai manufacturers in July. The latest increase was attributed to increases in fuel, transportation, and material prices.
Notably, inflation at this stage of the year was more than anticipated.
THE PHILIPPINES: The growth rate fell to its lowest level in 11 months. The PMI for the Philippines decreased from 53.8 to 50.8 points. The reductions in production levels and the influx of new business were the key factors contributing to the lower headline result.
Respondents to the Sandamp;P Global survey stated that “Client activity was sluggish in July, with higher charges hampering sales.”
All of July has seen sluggish business activity, with only a small increase in consumer spending. Reducing company demands and growing costs are having an impact on businesses, and companies are observing a decline in consumer enthusiasm in making purchases.
Average lead times increased to a greater extent despite only a slight increase in input purchasing and material demand, according to Maryam Baluch, another economist at Sandamp;P Global Market Intelligence. “Firms highlighted port congestion, shipment delays, and logical hurdles,” she added.
VIETNAM: INFLATION RATES DECREASE IMMENSELY At the beginning of the third quarter of 2012, the Vietnamese manufacturing sector was still expanding, but there were some indications that demand was waning.
In the past ten months, new orders have been going up, but the rate of expansion has dropped to its slowest point since April. Strong growth in new export orders outpaced growth in overall new orders.
In July, producers increased their output as new orders grew steadily. Over the previous four months, production rose. Due to price pressures, logistics issues, and signals of declining demand, the expansion rate was just modest.
The Sandamp;P Global Market Intelligence’s Andrew Harker, Director of Economics, was unconcerned about the fall in demand. He emphasized the upward trend in price pressure and supply constraints.
He noted that “supply chains are getting close to stabilization” and that “the rate of input cost increase decreased sharply.” “Given that these variables have consistently presented significant obstacles for businesses, signals of improvement should presumably enhance growth prospects.”
In Myanmar, the rate of deterioration was the fastest observed since October 2021. Economic growth is predicted to be less than initially projected because production volumes declined more quickly in July and the decrease in factory orders accelerated.
The panelists frequently emphasized how client financial restrictions have limited the flow of new orders.
Additionally, persistent material shortages and supplier price increases reduced output levels and even led to temporary factory closures.
Companies cut their workforce levels in July in response to a decline in production requirements. The low rate of job losses put a halt to a seven-month trend of rising employment.
Most businesses indicated no change in staffing levels, while some did indicate a decrease. Companies frequently attributed this to decreased order book volumes and employee salary unhappiness.
“The ongoing political turbulence continues to plague the country, and the impact on the industrial sector is severe,” said Baluch. “Our panelists frequently describe factory closures, supply chain disruption, and material scarcity.”
The combination of persisting political, economic, and economic issues as well as significant inflationary pressures paint a considerably grimmer image of the industry and its prospects as we begin the second half of the year, the speaker concluded.