The ASEAN manufacturing sector returned to growth in March, following declines in February, as output and orders increased during March.
According to latest data on the IHS Markit Purchasing Managers' Index (PMI) released today, the headline PMI increased to 50.8 in March, from 49.7 in February, signalling a slight improvement in the health of the manufacturing sector.
It said supply chain disruptions increased average lead times of inputs, added upward pressure on prices and pushed the rate of cost inflation to the steepest since January 2014. However, business confidence increased to a three-month high, slightly below the long-run average.
IHS Markit reported that four of the seven constituent nations witnessed expansions during March, with Vietnam (53.6) leading the fourth consecutive month of improvement. Indonesia and the Philippines also saw sustained growth during March.
The former headline index reached a record high of 53.2 since April 2011, signalling a robust rate of expansion, while the latter saw a modest growth, still solid overall at 52.2.
IHS Markit also highlighted supply chain disruptions and inflationary pressures on input costs causing firms to raise average charges to a near two-and-a-half year high in their March data. Input delays were the least severe since November last year.
It said amid a slowing rate of job shedding, backlogs of work increased for the first time since June 2014. Buying activity increased for the first time since May 2019 as firms sought to firm up inventories.
Singapore registered an improvement in manufacturing conditions during March (with the PMI at 50.7), indicative of a slower growth rate than in the past three months.
At the national level, Myanmar registered a record-low headline figure of 27.5 as factories remained closed amid political turmoil.
In Malaysia, the headline index was registered at just below the 50.0 mark, indicating stable health of the Malaysian goods producing sector. Meanwhile in Thailand, the downturn had eased since February, but the PMI at 48.8 signalled a modest rate of contraction overall.
IHS Markit economist Lewis Cooper reviewed the latest survey results, saying: "The ASEAN manufacturing sector saw a fresh improvement in conditions at the close of the first quarter."
He revealed that growth was driven by renewed increases in output and inflows of new work, and that supply chain disruptions allowed companies to pass on additional costs to clients as factory gate charges increased.
"Overall, the short-term outlook for the sector remains uncertain. Although now in a better position to continue a recovery from the [Covid-19] pandemic, we have yet to see signs of a solid, sustained rebound," he said.
Source: The Edge Markets
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