According to S&P Global Ratings, the ASEAN manufacturing sector saw modest improvement in January, with the ASEAN manufacturing PMI headline rising from 49.7 in December to 50.3. Manufacturers remained optimistic about future output over the next 12 months, and growth was observed in four out of the seven ASEAN member countries.
S&P Global Ratings’ purchasing manager’s index (PMI) data revealed a renewed, albeit slight, improvement in the ASEAN manufacturing sector at the beginning of the year.
Output experienced its fastest growth since August, supported by firms addressing backlogs, which decreased for the seventh consecutive month, while new orders declined.
The decline in sales was the mildest in the current five-month period of decline, according to S&P Global Ratings. Inflationary pressures intensified, with both input prices and output charges rising at the highest rates in ten months.
Weak demand was particularly evident in export markets, leading to a fifth consecutive month of overall new order decline, albeit at a marginal rate.
Maryam Baluch, an economist at S&P Global Market Intelligence, remarked, “Manufacturers may struggle to sustain output growth amid dwindling demand. If new orders continue to decline, the PMI could drop below 50, signaling significant challenges in the global economy and stagnant demand from foreign markets.”
Nationally, growth was seen in four of the seven ASEAN members, with Indonesia leading the upturn significantly. Myanmar experienced the most significant deterioration in conditions.
Trade-dependent economies like Thailand and Malaysia are expected to witness declines in production indexes, while consumption-based economies like Indonesia and the Philippines are likely to continue growing.
In Vietnam, companies expressed concerns about business conditions but remained hopeful for improved demand and customer numbers. Vietnam’s PMI showed growth again in early 2024, with the index remaining above 50 due to increasing new orders and output.
Looking forward, ASEAN manufacturers continue to exhibit strong optimism regarding output over the next 12 months. Despite an increase from December, overall positive sentiment remains below the historical average.
