Thailand manufacturing accelerates to fastest pace since August 2024

Production surges as domestic and export orders strengthen, prompting renewed hiring

Thailand's manufacturing sector accelerated to its fastest pace of growth in nearly a year in July, driven by strengthening demand both at home and abroad, according to the latest business survey data.

The S&P Global Thailand Manufacturing Purchasing Managers' Index (PMI) rose to 51.9 in July from 51.7 in June, marking the third consecutive month above the crucial 50.0 threshold that separates growth from contraction. The reading signalled the sharpest improvement in manufacturing conditions since August last year.

New Orders Drive Expansion

The acceleration was primarily driven by a significant upturn in new orders, which grew at the fastest pace so far this year. Thai manufacturers reported rising client interest and successful business development efforts as key factors behind the improvement.

Export orders also continued their positive trajectory for the third straight month, maintaining momentum despite broader uncertainties in global trade. The sustained growth in overseas demand helped support the sector's overall expansion.

"July's PMI data painted a rosier picture for Thailand's manufacturing sector, as the improvement in conditions gathered momentum to reach the fastest in nearly a year," said Jingyi Pan, Economics Associate Director at S&P Global Market Intelligence.

Production Ramps Up, Jobs Return

The surge in new business translated into solid production growth, with manufacturing output expanding at its quickest pace since last August. Companies scaled up their operations to meet the increased workload, resulting in the fastest rise in production in nearly 12 months.

The improved demand conditions also encouraged manufacturers to resume hiring after employment levels stalled in June. Firms increased their workforce capacity to cope with rising workloads, whilst simultaneously reducing their backlogs of unfinished work for the fifth consecutive month.

Supply Chain Pressures Persist

Despite the positive momentum, Thai manufacturers continued to face supply chain challenges. Delivery times lengthened further as suppliers struggled with delays, maintaining pressure on the manufacturing pipeline.

However, input costs provided some relief, declining marginally in July as price increases were offset by supplier discounts and benefits from bulk purchasing arrangements. Some companies continued to report higher raw material prices, but these were balanced by more favourable terms elsewhere.

Average selling prices continued to edge higher, though only slightly, suggesting manufacturers were exercising restraint in passing costs onto customers.

Business Confidence Reaches 11-Month High

Looking ahead, confidence in Thailand's manufacturing sector improved markedly as companies entered the second half of 2025. Goods producers were at their most optimistic in 11 months, buoyed by hopes that promotional campaigns and business expansion plans would drive sales growth throughout the year.

The forward-looking Future Output Index indicated that confidence had reached its highest level in nearly a year, hinting at continued output growth in the near term.

Inventory Management Shows Mixed Picture

Companies responded to stronger demand by increasing their purchasing activity at the fastest rate in nearly a year, leading to further accumulation of input stocks. However, finished goods inventories fell marginally for the second consecutive month as firms shipped products to fulfil orders.

"It was also positive to see the improvement in demand and business confidence translate to higher purchasing activity and inventory levels in July. Furthermore, employment growth also renewed at the start of the third quarter," Pan noted.

Outlook Remains Positive

The combination of accelerating domestic demand, sustained export growth, and renewed job creation suggests Thailand's manufacturing sector is building solid momentum as it moves through 2025.

Whilst supply chain pressures remain a concern, the sector's ability to maintain growth whilst managing costs effectively positions it well for continued expansion in the coming months.

The resilience shown by Thai manufacturers in the face of global trade uncertainties demonstrates the sector's adaptability and the effectiveness of companies' business development strategies.