KUALA LUMPUR (July 1): Asean’s manufacturing sector grew in June but at a second-slowest pace in nine months, according to S&P Global’s latest Purchasing Managers’ Index (PMI) survey.

However, growth in output and new orders quickened compared to May, on the back of stronger demand conditions, it said in a report dated July 1.

Asean nations recorded a manufacturing PMI of 52, from 52.3 in May, with Singapore leading the pack for the seventh month running at 59.3.  

Six of the seven Asean nations signalled growth in June, although four saw a slower pace from May, while Myanmar recorded a decline at 48.2.

A PMI reading of above 50 indicates an expansion, under 50 indicates a contraction, while at 50 indicates no change, when compared with the previous month.

“Anecdotal evidence suggested that stronger demand conditions underpinned production growth. Factory orders also expanded at a quicker rate.

“However, after a modest increase in the previous survey period, ASEAN manufacturing firms noted a drop in new business from abroad,” the report said.

S&P Global Market Intelligence economist Maryam Baluch said that each region was impacted one way or another by surging inflation, raw material shortages and energy price hikes.

“Nevertheless, sentiment was positive across the ASEAN manufacturing sector with panellists hopeful that output would expand in the coming 12 months,” Baluch said.

Other Asean nations include Vietnam (54.0), Thailand (50.7), Malaysia (50.4) and Indonesia (50.2). Notably, Philippines (53.8) grew for its fifth consecutive month with its third-fastest growth since November 2018.

The survey also found that rising costs resulted in depletion of stocks of purchases and staff lay-offs, while supply chains remained stretched and lead times lengthened for the 29th consecutive month – albeit at a slower pace from May.

“In line with rising input costs, factory gate charges also rose, thereby extending the current bout of inflation to 20 months.

“While the rate of increase eased from May, it remained sharp and amongst the quickest on record,” S&P Global said.