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ASEAN manufacturing sector improves further in September

Staff Writer | October 4, 2017
Latest PMI data indicated that the ASEAN manufacturing economy rounded off the third quarter on a positive note, although growth remained marginal.
ASEAN manufacturing
ASEAN   Nikkei ASEAN Manufacturing PMI
The headline Nikkei ASEAN Manufacturing Purchasing Managers’ Index (PMI) registered 50.3 in September, slightly down from 50.4 in August, but signalling a further improvement in the health of the sector.

However, the pace of improvement remained slight.

Further expansions in output and total new business underpinned the latest upturn.

However, only a slim majority of the countries covered by the survey recorded an improvement in operating conditions, with the number of nations recording an improvement shrinking from five in August to four in September.

Vietnam continued to lead the overall growth rankings, and saw its PMI pick up to a five-month high during September.

The Philippines moved up the table to second position, though its pace of growth remained marginal overall.

Indonesia showed a further improvement in business conditions while Thailand returned to growth after showing deteriorations in the previous two months.

Having seen an improvement in the previous month, Malaysia reported broadly stagnant manufacturing conditions in September.

Singapore meanwhile slipped into contraction territory.

Myanmar continued to signal weakening business conditions, although the rate of decline remained slight.

ASEAN manufacturing output rose for a second straight month during September, in line with signs of strengthening demand.

Total new business inflows increased at the strongest rate for five months, supported by rising export sales.

Increased demand failed to add pressure on production capacity, however, as ASEAN manufacturing backlogs declined again.

A lack of pressure on operating capacity continued to weigh on hiring Furthermore, overall employment fell in September, albeit marginally.

Despite greater demand, firms did not scale up their buying activity.

On the contrary, the quantity of purchases remained broadly stagnant, and that in turn weighed on inventories.

Companies depleted existing stocks for production and to meet orders, as shown by inventories of both inputs and finished goods falling in September.

Notably, pre-production stocks have now fallen in each of the past 12 months.

Business confidence also dipped in September.

While firms generally signalled optimism about output for the year ahead, the Future Output Index came in at the lowest level for five years.

Detailed survey data also revealed varying degrees of confidence among the countries covered.

On the price front, there were signs of rising cost pressures, with the Input Prices Index reaching a four-month high.

All monitored nations reported higher input costs during September ─ with a number of countries recording a faster rate of inflation than in the previous month.

Myanmar showed the quickest rise in cost burdens, but it was the Philippines and Vietnam that registered sharper pickups in inflation amid reports of rising costs for raw materials.