KUALA LUMPUR (May 7): The start of the second quarter saw manufacturing conditions across ASEAN improving at a quicker pace, said IHS Markit.

"Faster rises in both output and new orders boosted the headline index, alongside a renewed upturn in employment," said IHS Markit principal economist Bernard Aw.

IHS Markit compiles the Nikkei Manufacturing Purchasing Managers' Index (PMI) survey.

The Nikkei Manufacturing PMI for ASEAN rose to 51 in April from 50.1 in March 2018.

Five of the seven countries covered by the survey recorded a PMI reading above the neutral 50 level, up from four in March. The countries are Myanmar, Vietnam, Philippines, Indonesia and Singapore.

The other two, namely Thailand and Malaysia, recorded decreases in the reading. According to IHS Markit, Malaysia, whose PMI reading was at 48.6, signalled a decline in the health of its manufacturing sector, with the pace of deterioration the steepest since October 2017.

Aw said while April survey data was encouraging, it's clear that demand needs to grow at a faster rate before stronger growth can take root.

"First, sales are not increasing fast enough to test the capacity of manufacturers across the region. Backlogs of work continued to fall, which weighed on hiring, suggesting that future job creation may be limited.

"Second, firms remained cautious about inventory management despite the pick-up in orders. Inventories of both inputs and finished goods continued to be depleted. Third, while business confidence remained positive, optimism was among the lowest in the survey history," he noted.