Asean’s manufacturing sector struggled to grow hindered by a contraction of production and new orders. The headline PMI for the region in October was 48.6, slightly above 48.3 in September but still below the positive threshold for GDP growth.

 

In October, economic conditions in the Asean region continued to deteriorate for the eighth consecutive month, according to Markit Purchasing Managers’ Index (PMI) report. The rate of decline has slowed from September. Data showed a further contraction in output and orderbook volumes in October. But manufacturers remain optimistic about the 12-month outlook for production. Business sentiments were the highest since January.

 

Factory production dropped in the Asean region as demand remained muted. Although producers are optimistic of a recovery in the next 12-month period, further COVID-19-related lockdowns may hinder economic recovery, said the report

 

Of the seven constituent countries namely Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, four recorded deterioration in operational conditions in October. In Myanmar, the PMI index fell to a near-record low of 30.6 signalling a rapid decline in the manufacturing sector, while the index for Indonesia was at 47.8, indicating a moderate contraction. Malaysia’s PMI was at 48.5, with a mild deterioration in overall conditions, while the recorded PMI of 48.5 amid a renewed contraction in the manufacturing sector.

 

On the other hand, Thailand posted its first improvement in business conditions since December last year. The country’s PMI rose to 50.8 in October from 49.9 in September, with a slight improvement in the manufacturing sector. Vietnam reported sustained growth reporting PMI of 51.8 with a reasonable rate of expansion. Singapore’s Manufacturing PMI improved to 52 in October for the first time since July 2018 amid moderate growth.

 

Reduction in new orders due to a weakness in the export market has dragged the manufacturing sector in the Asean region. Capacity utilization at factories was challenged by a decline in orderbooks, which also pressured raw material purchases in October. Profits margins declined amid a rise of input cost and lower selling prices from September. However, producers remain confident that production would rise in the next few months. 

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