Philippines leads ASEAN manufacturing performance in Dec

MANILA, Philippines — Manufacturing conditions in the ASEAN region were weaker in December, weighed down by slow growth in output and high cost of inputs, according to the latest reading of the Nikkei ASEAN Manufacturing Purchasing Managers Index (PMI).

The headline Nikkei ASEAN Manufacturing PMI for December stood at 49.9 in December from 50.8 in November. This is already in contraction territory as a reading of above 50 indicates expansion while a reading below this level points to worsening business conditions.

IHS Markit, the firm that compiled data for the index, said the Philippine factory sector remains the top performer in the region despite a slower expansion in the reference period as indicated by a PMI reading of 54.2 in December, marginally down from 54.8 in November.

Other countries whose manufacturing sector registered expansions in December were Vietnam, Myanmar and Thailand. Registering declines, on the other hand, were Malaysia, Indonesia and Singapore.

Purchasing managers reported softer increases in output and “largely stagnant new order volumes” during the period mostly because of slower foreign demand. This caused most manufacturers in the region to be cautious in purchasing inputs.

ASEAN manufacturers also reported a “marked rise in average input prices.” This prompted producers across the region to raise prices anew.

“Growth remained strongest in the Philippines for the third consecutive month, although the rate of improvement slowed slightly since November,” the report said.

IHS Markit principal economist Bernard Aw said, however, that ASEAN manufacturers maintain a positive outlook for the next 12 months.

“The ASEAN manufacturing economy finished the year on a subdued note as business conditions were broadly stagnant in December. The Nikkei survey data showed that output growth slowed and new orders failed to expand for the first time in five months. There was little support from external markets either, as export sales fell at the end of the year,” he said.

“A bright spot, however, was a further improvement in business confidence about the 12-month outlook. The Future Output Index rose to the highest level since March,” he added.