Thailand’s manufacturing recovers yet employment and factory gate prices tumble

Manufacturing sector regains momentum, though cooling confidence and falling factory gate prices signal a more cautious mood.

Thailand's manufacturing sector picked up pace in February, recovering from a five-month low in the previous month as stronger demand pushed output and new orders higher.

Yet the improvement was accompanied by a fresh round of job cuts and the steepest fall in factory gate prices in more than five years, suggesting that firms are working hard to win business in an increasingly competitive environment.

The S&P Global Thailand Manufacturing Purchasing Managers' Index rose to 53.5 in February from 52.7 in January, a partial rebound that nonetheless left the headline reading comfortably above both the 50-point threshold that signals expansion and the survey's long-run average of 50.3.

The result pointed to solid, if unspectacular, improvement in overall operating conditions.

The recovery was driven chiefly by new orders and output — the two most heavily weighted components of the index. Manufacturers reported winning new customers and a generally firmer demand environment, which fed through to production floors as output grew at a solid and accelerating rate.

Purchasing activity expanded for a ninth consecutive month as firms stocked up to meet rising production requirements, though stocks of purchased inputs edged fractionally lower by the end of the period.

Despite the busier conditions, companies trimmed their headcounts for the second time in three months.

The reduction in staffing was only marginal, but it was the most pronounced since March 2024.

Firms continued to accumulate a backlog of unfinished work — outstanding business has now risen for seven months in a row — suggesting that leaner workforces are struggling to keep pace with the volume of orders coming through the door.

The picture on prices was striking. Input costs fell for the first time in five months, and manufacturers passed those savings on swiftly, cutting their selling prices for a third consecutive month.

The rate of decline in factory gate charges was the sharpest recorded since July 2020, though it remained modest in absolute terms. Analysts noted that deliberate discounting appeared to be part of the strategy, with firms using lower prices to attract and retain customers rather than rebuilding margins.

Supplier delivery times continued to lengthen, extending for a third straight month, and the deterioration was the most pronounced since April last year — though still only modest overall.

Phil Smith, Economics Associate Director at S&P Global Market Intelligence, said the sector appeared to be on course for a solid opening quarter, but cautioned that the mood had become more restrained.

He pointed to the combination of modest job cuts and falling output prices as evidence that firms were making deliberate choices about costs, apparently willing to sacrifice margins in order to secure more business.

Business confidence, whilst remaining firmly positive, has eased back from the particularly elevated levels recorded towards the end of 2025.

For now, Thailand's manufacturers are expanding — but doing so carefully, with one eye on the price tag.