Asean manufacturing conditions improve in nine months – IHS Markit

Operating conditions in the Asean manufacturing sector improved for the first time since May last year in February, albeit fractionally, according to latest IHS Markit purchasing managers’ index (PMI) data.

The headline PMI rose to 50.2 in February from 49.8 in January, signalling the first improvement in the health of the Asean manufacturing sector in nine months. A PMI reading of above 50 represents an expansion.

In a report today, IHS Markit said February saw new orders increasing in nine months, but only mildly.

“Falls in output and employment weighed on the headline figure, however, as production declined for the first time since last November and workforce numbers fell at the quickest rate for three months,” it added.

The Philippines recorded the best
performance of the seven monitored countries in February, with the headline PMI (52.3) signalling the joint-fastest improvement in operating conditions since December 2018. Indonesia also reported an expansion, the first for eight months, with the headline figure (51.9) indicative of a modest uptick.

Malaysian goods producers also recorded a deterioration in operating conditions during February, as has been the case through the majority of the past five years. The headline index (48.5) signalled only a mild rate of decline, however.

Singapore’s downturn continued during February. The headline figure (45.8) was the lowest for four months and indicative of a solid deterioration in the health of the manufacturing sector.

Meanwhile, Thailand reported a second consecutive deterioration in manufacturing conditions, with the headline index (49.5) among the lowest since October 2018. At the same time, Vietnam’s headline figure (49.0) signalled the first deterioration in the health of the sector since late-2015 amid reports of coronavirus (Covid-19) disruption. That said, the decline was only mild overall.

IHS Markit said February data also highlighted the quickest fall in preproduction inventories for four months, whilst stocks of finished items declined for the first time since August last year.

“On the price front, cost burdens continued to rise, with the rate of inflation the quickest since May last year and moderate overall. Higher costs were not passed through to clients, however, as selling prices were broadly stagnant.

“Firms remained, on average, positive that output would increase over the coming year, but overall optimism slipped to a four-month low,” it noted.

“The lack of output growth so far this year, coupled with renewed supply chain pressures, adds to concerns over whether the health of the sector can improve further. Next months data will provide a further indication of the effect of the coronavirus outbreak on Asean goods producers,” IHS Markit economist Lewis Cooper said.

Source: The Edge Markets