Myanmar manufacturing contracts after 10-month expansion as output falls
Jobs growth and easing price pressures offer relief.
Myanmar’s manufacturing sector contracted for the first time in 10 months in May, as weakening demand and acute raw material shortages drove the sharpest fall in output in a year, reversing the fragile stabilisation that had taken hold since last summer.
The S&P Global Myanmar Manufacturing PMI fell to 49.3 in May from 50.9 in April — dipping below the 50.0 threshold that marks the boundary between growth and contraction. Whilst the overall deterioration was mild, the speed of the reversal underlined how precarious conditions remain for the country’s manufacturers.
Output was the principal drag on the headline figure, falling at the fastest pace in 12 months. Firms attributed the decline to a combination of weak demand and material scarcity.
New orders also fell for the first time in 2026, with manufacturers widely noting that reduced purchasing power amongst clients had curtailed sales.
Buying activity was cut for the second consecutive month at the sharpest rate in four months, reflecting both lower production requirements and ongoing difficulties sourcing materials.
Firms were forced to draw on existing stockpiles to fulfil orders, with pre-production inventories edging lower, albeit at the slowest rate in three months.
Supply chain pressures persisted, with average vendor lead times continuing to lengthen to a notable degree.
Material shortages remained the primary reason for deteriorating supplier performance, though a modest easing in purchasing activity helped limit the strain compared with recent months.
Against this otherwise gloomy backdrop, there were two meaningful bright spots. Employment rose for the second month in succession — the first back-to-back increase in three years — with firms reporting the successful recruitment of full-time workers.
The rate of job creation was moderate but the second-fastest since April 2022. Cost pressures also eased markedly from April’s recent highs to their weakest level in three months, with nearly two-thirds of survey respondents reporting stable prices.
Where costs did rise, firms linked the increases to material shortages and higher transportation charges, and passed a portion on to clients through higher selling prices — though both input and output price inflation remained historically elevated.
Business confidence about the year ahead improved for the first time in four months, reaching its highest level since January. However, sentiment remained subdued by historical standards, with raw material shortages continuing to weigh on the outlook.
Firms that were optimistic pointed to expectations of improved demand conditions and the launch of new products as the basis for their confidence.
Maryam Baluch, Economist at S&P Global Market Intelligence, said a deteriorating demand picture and material scarcity had posed significant challenges for Myanmar’s manufacturers in May.
The headline PMI had slipped into contraction territory for the first time in ten months, with output, new orders, and purchasing activity all falling solidly. She noted, however, that continued employment growth — the first consecutive monthly increase in three years — and a notable easing of price pressures were encouraging signs.
The latter, she said, could help unlock demand in the months ahead, particularly given that manufacturers had consistently linked poor sales to reduced purchasing power amongst their customers.
