ASEAN manufacturing hits five-month high as US factories slow

The ASEAN manufacturing sector posted its strongest improvement in five months in July, rebounding from a weak second quarter shaped by Middle East conflict disruptions, as US factory growth simultaneously weakened to its lowest level since March.

The seasonally adjusted S&P Global ↗ 1.01% ASEAN Manufacturing Purchasing Managers' Index rose to 52.8 in July from 50.5 in June, with new orders increasing at their fastest pace since February and production expanding at the quickest rate in five months.fibre2fashion+1

Regional Rebound

Nearly all seven monitored economies — Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam — recorded improved operating conditions after a relatively weak second quarter. Myanmar was the sole exception.asianbusinessreview+1

Thailand led the global PMI rankings with its strongest growth of the year, followed by Vietnam, which posted an expansion among the fastest in its 15-year survey history. Indonesia recorded the month's largest improvement.spglobal

"The ASEAN manufacturing sector appears to have moved past the softer patch seen between March and June, when activity was still heavily affected by the ongoing conflict in the Middle East," said Maryam Baluch, economist at S&P Global Market Intelligence.fibre2fashion+1

Manufacturers raised purchasing activity and employment rose for the first time since March, though staffing gains were insufficient to meet output requirements, pushing backlogs of work higher at the fastest pace since October. Business confidence strengthened to its highest level since April 2023.asianbusinessreview+1

Diverging Global Trends

The ASEAN rebound contrasted sharply with North America, where output growth slowed to its weakest since March as US factory conditions deteriorated and Mexican output fell further. Canada bucked the regional trend with its recent return to growth gathering pace.spglobal

Japan was the standout developed-market performer, with output growth accelerating to its strongest since February 2012, supported by a weak yen that boosted competitiveness. Mainland China's expansion meanwhile eased to its weakest since March, and India's growth slowed to its softest in four years.spglobal

Price Pressures Ease

Input cost pressures in ASEAN moderated further from April's spike, though costs continued to increase sharply, with manufacturers passing higher expenses to customers through elevated selling prices. The easing of supply chain pressures, particularly around oil flows disrupted by the Middle East conflict, underpinned the region's recovery.asianbusinessreview+1

Brazil reported the steepest downturn among all economies tracked globally in July, contracting at its fastest rate since February as rising prices weighed on demand.spglobal