ASEAN manufacturing grows despite rising inflation

ASEAN manufacturers experienced the strongest new order growth in 15 months in July, according to the S&P Global ASEAN Manufacturing Purchasing Managers’ Index (PMI).

The PMI stood at 51.6, slightly down from June’s 51.7, indicating a modest improvement in business conditions for the seventh consecutive month. The sector saw solid increases in both output and new orders, continuing an expansionary trend that began in October 2021.

Employment levels rose marginally for the second month in a row, driven by rising business volumes and sustained demand. However, new export orders fell, marking the 26th month of contraction in this segment.

Input cost inflation accelerated to its highest rate since February, leading to increased selling prices. This trend is concerning, as higher costs could hinder future growth and prompt central banks to maintain stringent monetary policies. Despite these challenges, manufacturers showed optimism, with expectations for the next 12 months reaching a four-month high.

Economist Maryam Baluch from S&P Global Market Intelligence noted that while demand conditions have strengthened, the rising inflationary pressures might pose a challenge in the coming months.

Attribution: S&P Global ASEAN Manufacturing PMI