ASEAN manufacturing PMI hits seven-month high in February

It was driven by a surge in new orders and production.

The Association of Southeast Asian Nations (ASEAN) manufacturing purchasing managers’ index (PMI) rose to a seven-month high of 51.5 in February, up from 50.4 in January, according to an S&P Global report. This marks the highest reading since July 2023.

The report said that manufacturing conditions have now improved on a monthly basis since the start of the year.

Stronger demand drove the uptick, with new orders and output rising at the fastest pace in six and seven months, respectively. In response, firms ramped up hiring and purchasing activity, whilst business confidence hit a 22-month high.

“February saw a significant improvement in ASEAN manufacturing conditions,” said Maryam Baluch, economist at S&P Global Market Intelligence. “Strong underlying demand trends contributed to solid growth in total new orders, prompting firms to increase production at a comparable pace.”

In response to rising workloads, manufacturers ramped up operational capacity. Purchasing activity also grew at a stronger rate, contributing to the first rise in input stocks in eight months.

However, stocks of finished goods continued to decline as firms relied on inventories to meet sales demand.

Backlogs of work also increased in February, extending the current accumulation period to a full year. However, the rate of accumulation eased from January, suggesting that capacity expansions helped alleviate pressure.

Meanwhile, cost pressures remained stable, with input costs and output charges rising at modest rates. Both remained below long-term averages, indicating a relatively subdued price environment despite the recent uptick in activity.

Looking ahead, optimism amongst ASEAN manufacturers strengthened further, with sentiment on future output reaching its highest level in 22 months. "In preparation for higher workloads and to meet current production needs, both employment and input purchases were also increased," the report said.

"Encouragingly, despite the recent uptick in activity within the region's manufacturing sector, inflationary pressures remained contained and historically subdued," it added.