ASIA: Indonesia & Philippines Bright Spots For ASEAN Manufacturing

The S&P Global ASEAN manufacturing PMI fell to 50.4 in January from 50.7 remaining just in growth territory but slowest in almost a year. Indonesia was the only country to post a material increase in the PMI and Indonesia and the Philippines were the only ones to report growth in industrial activity. Output and orders increases slowed but so did price/cost pressures, while the labour market “stabilised”. Despite this capacity pressures are showing with backlogs up for the eleventh straight month. With the US imposing tariffs, the outlook for the region remains highly uncertain, although January business confidence was unchanged.

• Indonesia’s manufacturing PMI rose to 51.9, highest since May, from 51.2 to be 3 points above the August low, driven by an increase in output, orders and employment growth, which boosted stockbuilding. There was a second straight rise in “new export business”.
• Despite a pickup in costs driven by raw materials, selling price inflation rose by less as firms narrowed margins in order to increase sales.
• In contrast Thailand’s manufacturing sector contracted slightly in January with the PMI falling to 49.6 from 51.4, the lowest since April 2024. Output and orders were down on the month and thus inventories too, while staffing was stable but confidence re the outlook improved and is above average. There were capacity pressures though with backlogs rising.
• Cost inflation rose for the third consecutive month to be its highest in almost a year but selling prices remained subdued.
• The Philippines was the other country to post a PMI above 50 and remains the strongest in ASEAN but it fell 2 points in January to 52.3 as output and orders growth slowed and employment was steady. Confidence remained positive but below average.

ASEAN S&P Global manufacturing PMIs seasonally adjusted