ASEAN Manufacturing PMI Slows in July 2023

The headline S&P Global ASEAN Manufacturing Purchasing Managers’ Index (PMI) posted above the neutral 50.0 threshold for the twenty-second successive month.

IDXChannel - The headline S&P Global ASEAN Manufacturing Purchasing Managers’ Index (PMI) posted above the neutral 50.0 threshold for the twenty-second successive month in July 2023.

However, at 50.8, the headline index edged down from 51.0 in June and for the third consecutive month, signalling the weakest improvement in the health of the ASEAN manufacturing sector since last December.

July data pointed to a mixed picture across the ASEAN region, with only four of the seven constituents registering an improvement in operating conditions. 

Displacing Thailand, Indonesia led the PMI rankings for the first time in 20 months. Moreover, the latest reading of 53.3 signalled a solid rate of expansion that was the quickest in ten months.

After the headline index eased to an 11-month low in June, manufacturing firms across the Philippines also registered a stronger improvement in conditions in July (PMI at 51.9). Goods producers in Myanmar were not far behind, with the headline PMI reading of 51.1 picking up from a five-month low in June. 

The only other country to record growth across its manufacturing sector was Thailand. However, the pace of improvement cooled further from April’s record high. Notably, at 50.7, the PMI signalled the
joint-weakest pace of expansion since the current period of recovery began in January 2022.

The countries that reported a deterioration in conditions were Vietnam (PMI at 48.7), Singapore (48.5) and Malaysia (47.8). 

“PMI data for the start of the third quarter highlighted a sustained slowdown across the ASEAN manufacturing sector. Both output and total new orders expanded at weaker rates than in June. Moreover, data suggested that growth was predominantly driven by domestic markets, as new orders from overseas contracted at an accelerated pace, said Maryam Baluch, Economist at S&P Global Market Intelligence, in a media release on Wednesday (2/8/2023).

“Moreover, the outlook for output seems to have dimmed, as signalled by the Future Output Index slumping to a three-year low. Lingering global market uncertainty, China’s softening post-COVID recovery, and relatively subdued domestic demand all weighed on sentiment," the economist added.

Vietnamese manufacturers signalled a fifth successive monthly deterioration in operating conditions during July.

However, the latest decline was the softest seen over this period and only mild. Goods producers across Singapore, however, signalled a contraction for the first time in four months. Despite being modest, the headline reading was the lowest recorded in nearly two years.

Lastly, as has been the case since September 2022, Malaysian manufacturers remained in contraction territory at the start of the third quarter. Moreover, the pace of decrease was stronger than that seen historically. (WHY)