ASEAN manufacturing PMI slows in May on subdued demand

Five of the seven Southeast Asian nations surveyed reported improving manufacturing conditions last month. 

Factory activity across seven Southeast Asian nations continued to improve in May though the pace of growth has started to slow down on softening demand for manufactured goods, a survey by S&P Global showed.

S&P Global’s ASEAN manufacturing purchasing managers’ index (PMI) settled at 51.1 last month, indicating modest improvement in the overall health of the sector, but the pace of growth eased from the 52.7 reading in April. 

Last month's print was also weaker than the average growth rate seen in the past 20 months of consecutive growth, when the index stayed above the 50 neutral mark that separates expansion from contraction.

“Manufacturers reported softer rates of expansion for both new orders and output. Underlying demand trends are softening across the region," Maryam Baluch, an economist at S&P, said in a note published Monday. 

Five of the seven economies covered in the survey reported improvement last month – Thailand, Myanmar, the Philippines, Singapore and Indonesia – while the health of the manufacturing sectors of Malaysia and Vietnam deteriorated.

Thailand continued to lead the pack with a PMI of 58.2 in May, its second-strongest showing in history trailing behind its record 60.4 reading in April.

This was followed by Myanmar’s headline figure of 53 in May which hit a three-month low.

The Philippines was the only country with faster expansion last month with a 52.2 reading from its 51.4 print in April, while Singapore (51.2) and Indonesia (50.3) both posted marginal improvements.

Malaysia’s manufacturing PMI contracted for the ninth month running at 47.8 in May, while Vietnam witnessed its reading plummet to 45.3.

Across the region, results of the survey showed foreign demand for ASEAN manufactured goods fell sharply last month, dampening new orders. 

Manufactures were still ramping up production for nearly two years straight now but the momentum started tapering off last month, seen in their slowing purchasing activity. 

Companies also continued to scale back on their staff for three months in a row.

The survey also showed pressures from supply chain woes and high inflation have eased in May, while companies were “generally optimistic” but still cautious on their outlook for the sector in the next 12 months.