ASEAN manufacturing PMI improves for nearly two years straight

Output rises at its fastest pace in three months

The overall health of Southeast Asia’s manufacturing sector has improved for nearly two years in August on the back of healthy new orders and production, according to an industry survey by S&P Global.

S&P’s headline ASEAN manufacturing purchasing managers’ index (PMI) inched up to 51 last month from 50.8 in July to signal a modest expansion in the sector. The faster increase in the August PMI was attributed to sustained rise in new orders and output, with the latter hitting a three-month high.

Job-shedding also ended in August after five months while factories continued to catch up with their backlogs.

The increasing price pressures however are seen hurting the sector. Input price inflation quickened for the first time in seven months, with both cost burdens and selling prices rising at a faster rate than seen in July.

Across the region, improvements were seen in four of the seven economies tracked, where their respective PMIs stayed above the 50.0 threshold that separates expansion from contraction.

Indonesia led the pack with a 53.9 PMI in August from 53.3 the month prior. It was followed by Myanmar with its index rising at its fastest rate since May, and Singapore which signaled a fresh improvement last month. Manufacturing conditions also improved in Vietnam for the first time in six months.

Meanwhile, both the Philippines and Thailand fell into contraction territory in August while Malaysia remained in the red for a year now.

“Headwinds from the global economy and the ongoing interest rate cycles across many of the ASEAN economies raises (sic) worries of whether current demand trends will be sustainable in the second-half of the year,” said Maryam Baluch, economist at S&P.