The Southeast Asian manufacturing sector has recently demonstrated a notable improvement in February, marked by an increase in production and orders, as reported by S&P Global. The final manufacturing purchasing managers index (PMI) for the ASEAN region registered at 51.5 in February, an increase from 50.4 in January.
This rise surpasses the critical threshold of 50, which is indicative of economic growth rather than contraction. The PMI assessment encompasses the ASEAN countries of Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, as part of comprehensive surveys conducted by S&P Global. The improved performance of the ASEAN manufacturing PMI in February can be attributed to a strong and accelerated increase in new orders and output, which witnessed significant gains—the most substantial in six and seven months, respectively.
There’s a burgeoning optimism among manufacturers in Southeast Asia, with February's sentiment reaching a near two-year high. The heightened confidence in production outlook is reflected in the index moving closer to its long-term average, achieving a 22-month peak. In light of rising demand, factory managers within the ASEAN region proactively ramped up hiring and the purchasing of production inputs during February.
The escalation in employment levels and input procurement was a strategic move to prepare for increased workloads and fulfill existing production demands. Even with the robust demand and the uptick in input purchases, inflation has largely remained contained for ASEAN manufacturers through February, remaining subdued for both input costs and prices charged to consumers. Going forward, the prospects for ASEAN manufacturers look promising, especially within the context of a growing regional economy and anticipated foreign direct investment (FDI) flows in 2025.
A report from Krungsri, a Thailand-based bank, highlighted that the combined gross domestic product (GDP) of ASEAN nations is expected to expand by 4.6% in 2025. Additionally, as global enterprises continue to diversify their factory operations geographically, the region is poised to attract robust foreign direct investment inflows..