In September, the ASEAN manufacturing sector experienced only a "fractional" improvement, with a "shallow decline" in production levels reported by S&P Global. The headline S&P Global ASEAN manufacturing purchasing managers index (PMI) dipped to 50.5, down from 51.1 in August, although it remains marginally above the pivotal 50-mark that delineates growth from contraction. The ASEAN PMI index encompasses the manufacturing performance in Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
Data indicates a notable slowdown in demand for ASEAN factories during September, correlating with a sluggish international trade environment. "Growth in new orders softened, marking the softest uptick recorded in the past seven months. This upturn faced headwinds from consistently disappointing trade volumes, which have been on the decline since June 2022.
Additionally, the latest drop in new export sales was sharp and represented the most significant decline in over three years," as reported by S&P Global. Inflation rates, particularly concerning input costs and prices charged to customers, saw a cooling effect for ASEAN manufacturers during the month.
Despite the slow growth in demand, factories within the ASEAN region still opted to increase their payrolls in September. A "fresh rise in payroll numbers was observed, supported by months of improving sales volumes, which constituted the joint-strongest rise in employment recorded in two years," according to S&P Global. Despite the relative sluggishness in September’s figures, there remains a sense of optimism among ASEAN industrial managers.
"Confidence regarding future output has shown improvement, with optimism reaching its highest level since the beginning of the year. Manufacturers in the ASEAN region are hopeful for output growth over the next 12 months," the report concluded. The ASEAN manufacturing PMI is compiled by S&P Global through survey responses from 2,100 manufacturers across the region from September 12 to September 24..