Key insights
- ASEAN manufacturing growth slowed in March, with the PMI falling to a six-month low of 51.8. New orders and output growth decelerated, while input costs surged, leading to higher output prices. Business confidence also declined. The report suggests potential impacts from the Middle East conflict on ASEAN economies, but the limited direct impact on US equities warrants a slightly negative influence.
Investing.com -- The ASEAN manufacturing sector showed signs of cooling in March, with the S&P Global ASEAN Manufacturing Purchasing Managers’ Index falling to 51.8 from February’s record high of 53.8, marking the weakest performance since September.
The index remained above the 50 threshold that separates expansion from contraction, extending the region’s growth streak to nine months. However, the decline pointed to a loss of momentum across the seven tracked economies, which account for 98% of ASEAN manufacturing value added.
Production and new orders both expanded at slower rates in March compared to February’s sharp increases. New orders rose at the weakest pace since August, while output growth was the slowest in eight months. New export orders declined during the month.
Manufacturing firms responded by scaling back expansion plans. Purchasing activity and employment both increased marginally, representing weaker growth than previous months.
Companies reduced their stocks of finished goods for the first time since November, though pre-production inventories continued to grow at a slower pace.
Input costs surged at the fastest rate since October 2022, prompting manufacturers to raise their output prices at the sharpest pace in three years. Both price gauges moved above their long-run averages.
Four of the seven ASEAN economies tracked in the survey recorded slower manufacturing sector growth, including Indonesia, which remained barely in expansion territory.
Business confidence for the year ahead remained positive but fell to a four-month low. Data were collected between March 8-25.
Maryam Baluch, economist at S&P Global Market Intelligence, said the March data showed initial signs of war in the Middle East affecting ASEAN economies through demand, production and confidence channels.
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