Myanmar stays in contraction in February as operating conditions deteriorate

But the pace of decline eased, S&P Global noted.

Myanmar's manufacturing sector remained in contraction territory in February as the S&P Global Manufacturing PMI rose slightly to 48.5 from the previous month's 47.4.

This indicates a second consecutive month of contraction in the sector but signals that the pace of decline was easing.

The country's manufacturing sector experienced a continuation of the challenging conditions observed since the beginning of the year.

Operating conditions deteriorated, albeit at a slower rate compared to January.

Manufacturing output and new orders both declined, although the reductions were less severe than in the previous month. Companies faced ongoing challenges in maintaining their workforces due to resignations driven by factors such as the conscription law and a lack of financial opportunities.

This continued job shedding contributed to severe labour shortages, which, coupled with material scarcities and power outages, added pressure on production capacity. As a result, unfinished work in the sector increased, though at a less alarming rate than in January.

The persistent difficulties in supply chains were exacerbated by material shortages and challenges in obtaining import licenses, leading to prolonged average lead times for inputs—an issue that has persisted for over four years. Consequently, purchasing activity saw further reductions, although the decline was markedly softer than that observed earlier in the year.

On the prices front, inflationary pressures eased slightly in February, with both input costs and output charges continuing to rise sharply. Material shortages, alongside the kyat's devaluation against the US dollar, were identified as primary drivers of rising input prices.

Despite the prevailing challenges, manufacturers expressed a positive outlook for the coming year, with confidence levels reaching their highest point since January 2024. Firms remained hopeful for an uptick in demand and production, although many adopted a neutral stance regarding their year-ahead forecasts.

Overall, whilst conditions in Myanmar's manufacturing sector remained difficult, there were signs of stabilisation and cautious optimism for future recovery.