ASEAN factory activity slows further in October | Manufacturing Asia
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ASEAN factory activity slows further in October

Indonesia and the Philippines were the only nations with improving conditions last month.

Southeast Asia’s manufacturing sector continued to contract in October as new businesses slump for two months in a row, an industry survey by S&P Global showed.

The headline ASEAN manufacturing purchasing managers’ index (PMI) remained unchanged at 49.6 last month, signaling marginal deterioration in the overall health of the sector, according to S&P. 

The headline figure dipped below the neutral mark of 50.0, which separates contraction from expansion, for the second month running as five of the seven ASEAN nations surveyed posted contraction last month.

Malaysia remained the hardest hit with an unchanged PMI of 46.8 in October that marked its fourth consecutive months of shrinking factory activity. This was followed by Thailand (47.5) and Singapore (48.6), while the downturn was relatively softer in Myanmar (49) and Vietnam (49.6). 

Indonesia and the Philippines were the only nations that saw their local manufacturing industries improve in October with a headline PMI of 51.5 and 52.4, respectively.

S&P traced the region’s extended manufacturing slump to declining new orders and a sustained slowdown in output. This prompted factories to cut back on their buying activity for the first time in over two years, draining their inventories.

READ MORE: ASEAN factory activity dips for first time in two years

“If demand continues to soften, we could see manufacturers reducing their output in the coming months,” said Maryam Baluch, economist at S&P Global Market Intelligence.

On a positive note, the market slowdown helped temper inflation as seen in costs of input materials and output prices rising at muted rates.

ASEAN manufacturers remained optimistic that production will continue to grow in the coming year despite weakening market conditions. The level of confidence, however, was lower than historical average.

“Global economic headwinds continue to cloud the outlook, including the subdued economic recovery in China and the lagging effects of monetary policy tightening across the majority of the ASEAN constituents and elsewhere,” Baluch said.

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