Asean PMI hit as operating conditions worsen

 A worker holds an OPPO F1S smartphone at the OPPO smartphone factory in Tangerang, Indonesia. Operating conditions across the Asean region worsened for manufacturers for the second straight month in November. PHOTO: REUTERS
A worker holds an OPPO F1S smartphone at the OPPO smartphone factory in Tangerang, Indonesia. Operating conditions across the Asean region worsened for manufacturers for the second straight month in November. PHOTO: REUTERS

Operating conditions across the Asean region worsened for manufacturers for the second straight month in November, according to a survey out yesterday.

The Asean Manufacturing Purchasing Manager's Index (PMI) - an indicator of industry activity - posted a reading of 49.4 last month, compared with 49.2 in October. A reading below 50 indicates contraction.

The reading is based on original survey data collected from around 2,100 manufacturers by research company IHS Markit.

November's weak reading was attributed to declines in both output and total new orders. Softer client demand also caused firms to trim purchasing activity.

But performances in specific countries were varied.

Singaporean manufacturing conditions deteriorated for a third month in a row while the Philippines retained the top position in the region, leading most of the countries by a wide margin.

Filipino firms reported strong expansion in manufacturing, driven by continued growth in production and total new orders, the survey found.

The second-best performer was Vietnam, while Myanmar's manufacturing sector returned to growth after a five-month downturn. Meanwhile, Indonesian and Thai manufacturers faced further declines in business conditions.

Indonesia registered a deterioration for the second successive month, as floods in parts of the country disrupted supply chains.

Thai manufacturing remained under considerable pressure amid reports that a number of companies halted production due to the death of the king.

Malaysian manufacturing companies continued to experience worsening operating conditions, due in part to the weak ringgit.

IHS Markit economist Bernard Aw said overall growth in the region "is likely to remain challenging amid a subdued global economy". He added: "At the same time, a markedly stronger US dollar against regional currencies will likely exert further upward pressure on import prices. This implies that inflation may intensify further in the coming months."

A version of this article appeared in the print edition of The Straits Times on December 02, 2016, with the headline 'Asean PMI hit as operating conditions worsen'. Print Edition | Subscribe