ASEAN manufacturing sector growth slows during May: S&P Global

Nonetheless, sustained expansions in output supported a rise in pre-production inventories, thereby ending two months of destocking.

The headline PMI registered at 52.3 in May, marginally down from 52.8 in April. Although indicating a loss in growth momentum, the latest reading extended the run of expansion to eight successive months.

Singapore was one of the four nations where the pace of increase slowed. However, leading the ranking table at 57.3, the rate of expansion was marked, with growth now seen in each of the last nine months.

Of the seven constituents, only Vietnam noted a quicker uplift in May. At 54.7, the rate of expansion was the strongest for four months.

Meanwhile, manufacturing firms in the Philippines (54.1) recorded a slightly softer uplift than that seen in April. Nevertheless, the pace of increase was the second-fastest since November 2018.

The headline PMI reading for Thailand remained at 51.9 in May. While the overall expansion was mild, it was among the strongest in the series history.

Indonesia and Malaysia also saw the rates of increase soften in the latest survey period, recording 50.8 and 50.1 respectively.

Operating conditions across Malaysia broadly stagnated, however.

After expanding for the first time in 20 months during April, Myanmar’s manufacturing sector fell back into contraction territory. However, the rate of decline (49.9) was only fractional.

The ASEAN manufacturing sector observed a weaker improvement in operating conditions midway through the second quarter. Output growth was the second-softest in the current eight-month sequence of expansion.

Similarly, new orders also rose at a slower pace. However, after stabilising in the previous survey period, foreign demand for ASEAN manufactured goods strengthened, with new export orders expanding for the first time in three months.

Manufacturing firms across the region increased their inventory reserves during May. Sustained demand growth prompted companies to raise their preproduction inventory levels for the first time in three months.

On the price front, average cost burdens rose substantially, and at the third-strongest rate in the series history. Firms passed on a large proportion of the burden with factory gate charges rising at the second fastest pace on record.

ASEAN manufacturing companies increased employment levels for the second month in a row during May, albeit at a softer pace. The respective seasonally adjusted index posted marginally above the 50 no-change mark, pointing to only a slight uplift in headcounts.

Finally, sentiment regarding the 12-month outlook for output receded to a three-month low during May. Business confidence remained firmly in positive territory.

ALCHEMPro News Desk (DS)