In July, a notable rise in outstanding business contributed to a boost in the ASEAN manufacturing sector, according to a report released by S&P Global. The headline ASEAN manufacturing purchasing managers index (PMI) registered at 51.6 for July, a slight decrease from June's 51.7. However, this figure remains above the crucial 50-point threshold that indicates expansion rather than contraction in manufacturing activities.
S&P Global's monthly survey included inputs from manufacturers across the ASEAN region, covering countries such as Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. The report highlighted that demand conditions in the ASEAN manufacturing landscape continued to strengthen, with an increase in new orders reaching a remarkable 15-month high.
This positive trend enabled companies to bolster their production capabilities solidly during July. In addition, the report pointed out that manufacturers in the region also expanded their payrolls, reflecting a healthy labor market responding to growing production needs. However, it was noted that there was significant 'pressure on capacity' as firms tried to manage increased demand amidst various constraints. One of the challenges faced by ASEAN factory managers in July was the rise in input costs, which inflated at the most pronounced rate since February.
These escalating cost burdens were subsequently passed on to consumers, leading to an increase in selling prices across the board. Despite the overall positive performance in production and new orders, a concerning trend emerged in the area of new export orders. The report indicated that new export orders continued to decline, extending a sequence of contraction that has persisted for 26 consecutive months.
This raises questions regarding the competitiveness of the ASEAN manufacturing sector in global markets. The ASEAN Manufacturing PMI compiled by S&P Global was based on survey responses from approximately 2,100 manufacturers conducted in mid-July. These insights paint a complex picture of a sector experiencing growth while grappling with significant external pressures and internal cost challenges..