Who surged and who stumbled in SEA manufacturing early this year

The Philippines has the biggest PMI growth.

A mixed performance in output was observed in industrial activities, including manufacturing across the Southeast Asian Region for the first quarter (Q1) of 2024, according to a McKinsey report.

Indonesia, Malaysia, and the Philippines experienced robust growth during the quarter, driven by strong demand in vital local sectors such as electronics, manufacturing, and mining.

Industrial production in Indonesia grew by 2.5% in the Q1 of 2024, up from the previous quarter's 1.9%. Most sectors saw growth, with manufacturing, trade, construction, and mining being the largest contributors. The manufacturing Purchasing Managers’ Index (PMI) in Indonesia has remained in the expansionary zone for the past 32 months, although April's PMI of 52.9 was lower than March's 54.2. The demand for manufactured goods was primarily driven by the domestic market.

Malaysia's industrial production index (IPI) increased by 3.3% in Q1 of 2024, up from the previous quarter's 0.8%, supported by positive momentum in all subsectors, particularly electricity, mining, and manufacturing. The manufacturing sector rebounded significantly in both the electrical and electronic (E&E) and non-E&E industries, as well as in construction-related activities. Although Malaysia's PMI improved from 48.4 in March to 49.0 in April 2024, it remained in the expansionary zone, suggesting that any sector weaknesses may be diminishing.

In the Philippines, manufacturing production increased by 4.5% year-on-year in Q1, with electronics, food products, and chemicals contributing most to the growth.

The manufacturing PMI rose to 52.2 in April 2024 from 50.9 in March 2023, marking the most substantial improvement in the past five months. Enhanced global demand is elevating prospects. Companies have been advised to increase their purchasing activities and build inventories.

Subdued growth

Meanwhile, production in Singapore and Vietnam also grew, albeit at a slower pace, amid weaker performances in some manufacturing subsegments.

Singapore's industrial sector saw a modest increase of 1.4% in Q1 of 2024, a decrease from the fourth quarter of 2023's 1.9%. Notably, both manufacturing and construction outputs grew at a slower rate than in the previous quarter. The manufacturing sector contracted by 1.8% year-on-year in the first quarter, reversing the growth of 1.4% seen in the previous quarter. This decline was primarily due to reduced output in the biomedical manufacturing, electronics, and general manufacturing clusters.

The growth in the construction sector reached 4.1% year-on-year, continuing the 5.2% expansion from the last quarter of the previous year. Despite a decline in private-sector construction output, it was more than compensated for by an increase in public-sector construction output. Singapore's PMI dropped from 55.7 in March 2024 to 52.6 in April, yet it remained in the expansionary zone.

Thailand's industrial production contracted for the 16th consecutive month, declining by 3.5% year-on-year in Q1 of 2024, with the purchasing manager's index staying in the contractionary zone.

The manufacturing sector continued to weaken, with a 3% decline, marking the sixth consecutive quarterly contraction. This highlights an urgent need for Thailand to shift towards higher-tech and more in-demand sectors, as its manufacturing sector is plagued by outdated industries that are increasingly less sought-after in the current global market.