Jakarta: Growth across the ASEAN manufacturing sector softened again in December, with output rising only modestly as new orders declined at a quicker rate, according to S&P Global Market Intelligence.
The headline PMI figure fell for the third consecutive month, posting 50.3 in December, down from 50.7 in November.
Though manufacturing firms across the ASEAN region reported an improvement in operating conditions, thereby extending the current run of expansion that began in October 2021, the reading pointed to a further loss of momentum at the end of the year.
Moreover, the latest reading was the lowest in the aforementioned sequence and signalled only a fractional rate of improvement overall.
"The latest PMI data indicated that growth across the ASEAN region was losing steam. The slowdown was driven in part by increasingly subdued demand conditions across the region which resulted in a second month of contraction in new orders. Job shedding also entered its second month, as firms trimmed staff amid falling business requirements," Maryam Baluch, Economist at S&P Global Market Intelligence said in a media release on Wednesday.
"While the drop in demand has restrained growth, the effect on prices, along with the ongoing monetary policy tightening of central banks across the region, has helped curb inflationary pressures. Nonetheless, prices still continue to rise sharply across the region," Baluch added.
Only three of the seven ASEAN nations covered by the survey reported growth, namely the Philippines (PMI at 53.1), Thailand (52.5) and Indonesia (50.9), and all three saw business conditions improve at an accelerated pace since November. Notably, Filipino manufacturers led growth across the ASEAN region for the first time in 34 months.
In terms of the countries that reported a deterioration in manufacturing conditions, the softest downturn was seen in Singapore. That said, after toping the rankings table for a year, the latest downtick in the headline reading – which was among the largest index drops recorded over the PMI series history – marked the first month of contraction in 16 months.
The health of the Malaysian manufacturing sector also worsened during December, thereby stretching the current sequence of deterioration to four months. Moreover, at 47.8 the pace of decrease was the fastest in 16 months. Posting 46.4, the PMI figure for Vietnam signalled a second successive month of weakening conditions in December. Moreover, the rate of decline gained speed from November.
The sharpest contraction was seen across Myanmar (42.1). The latest reading marked the eighth straight month whereby the PMI has registered below the neutral 50.0 threshold. Additionally, the downturn accelerated for the second consecutive month to the fastest since September 2021.
"Lastly, output expectations for the year ahead fell to the lowest in over a year. The weaker global economic climate was a key concern, alongside inflation and further cuts to client spending," Baluch stated.
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