ASEAN manufacturing activity slips to 16-month low in April

Confidence is at its lowest since July 2020.

Manufacturing activity in ASEAN fell into contraction for the first time in 16 months in April, an S&P Global survey said.

The beginning of the second quarter of 2025 marked a significant decline in the health of the ASEAN manufacturing sector for the second consecutive month in April, dropping below the critical 50.0 mark for the first time since December 2023.

With a PMI reading of 48.7, down from 50.8 in March, manufacturers faced the most significant decline in operating conditions since August 2021.

There were new decreases in both output and new orders, prompting companies to reduce their purchasing activities and workforce numbers in response to lower production needs.

This declining situation was worsened by a substantial drop in confidence among manufacturers, who reported their lowest production outlook since July 2020.

The two key components of the PMI, new orders and output, both experienced notable decreases in April, ending streaks of 13 and six months of growth, respectively. These downturns were the steepest in 44 months. Conforming to the decrease in manufacturing demand, firms reduced their purchasing activities for the first time in half a year, with the decline being the most pronounced since August 2021.

April also recorded a second consecutive month of job losses, and while reductions in staffing were slight, they marked the most considerable contraction since April 2024. Reduced purchasing activity led to a decrease in input holdings for the first time in three months and alleviated stress on supply chains, which improved slightly for the first time in a year.

Cost pressures on firms eased in April, with a modest rise in costs at the slowest pace in four and a half years. Charge inflation remained weak and unchanged for the month. While respondents maintained a generally positive outlook for the future, their levels of optimism were noticeably lower, dropping below historical averages to the weakest point since July 2020.

Maryam Baluch, an economist at S&P Global Market Intelligence, commented on the ASEAN Manufacturing PMI data, highlighting the concerning trend of renewed contractions in output and orders and the significant decline in manufacturers' confidence. This drop raises concerns about the sector's recovery prospects and suggests possible challenges ahead.