Asean PMI up on higher global demand, stronger domestic markets

Workers at a blanket factory outside Hanoi, Vietnam, in March. Vietnam, the Philippines and Myanmar were the top performers, according to the Nikkei PMI survey.
Workers at a blanket factory outside Hanoi, Vietnam, in March. Vietnam, the Philippines and Myanmar were the top performers, according to the Nikkei PMI survey.PHOTO: REUTERS

Manufacturing continued to pick up across the region last month, driven by improving domestic markets and an uptick in global demand, according to a new survey.

The Nikkei Asean Manufacturing Purchasing Managers' Index (PMI) - an indicator of industry activity - rose from 50.9 in March to 51.1 last month. A reading above 50 indicates expansion.

Though only slight, the rate of improvement was the quickest recorded in 33 months.

The survey covers Vietnam, the Philippines, Myanmar, Malaysia, Indonesia, Singapore and Thailand. Taken together, these countries account for an estimated 98 per cent of Asean manufacturing activity.

Results are based on original survey data collected from a representative panel of around 2,100 manufacturing firms.

All the countries - except Thailand - saw manufacturing expand last month, with Vietnam, the Philippines and Myanmar the top performers.

While the data suggests that the domestic market remained key for Asean manufacturers, the latest survey showed an upturn in foreign demand for the first time since September last year.

New export sales showed a return to growth after six months of decline, and rose at the quickest pace in more than two years.

It might be too early to tell if stronger growth is here to stay, said Mr Bernard Aw, an economist at IHS Markit, which compiles the survey. "It seems a little hasty to conclude that the upturn is sustainable. Employment levels were little changed, partly due to spare capacity across the region."

Also, "future expectations for manufacturing output continued to ebb, with substantial variations in the degree of business confidence observed across the region", he said.

This survey follows a separate manufacturing PMI survey compiled by the Singapore Institute of Purchasing and Materials Management released earlier this month. It showed that manufacturing here logged its eighth straight month of expansion last month.

A version of this article appeared in the print edition of The Straits Times on May 06, 2017, with the headline 'Asean PMI up on higher global demand, stronger domestic markets'. Print Edition | Subscribe