The ASEAN manufacturing sector saw conditions improve in July, with the positive moment from the first half of the year carrying over thanks to robust demand.  

“Growth seen across the ASEAN manufacturing sector in the first half of the year was sustained as we entered the second half of 2024,” said Maryam Baluch, an economist at S&P Global Market Intelligence, in a note on Thursday.

The headline S&P Global ASEAN Manufacturing Purchasing Managers’ Index came in at 51.6 in July, according to almost flat with June’s 51.7 reading. Anything below 50.0 signals that the sector contracted during that month, while anything above indicates expansion.

This was the seventh consecutive month of growth in the sector.  

Strong new orders

Strong receipts in new orders spurred production in July, leading to some job creation.  

“Demand conditions continued to strengthen, with growth in new orders ticking up to a 15-month high, which in turn allowed firms to raise their production solidly in July,” Baluch said.  

“Moreover, sustained improvement of the sector spurred goods producers to take on additional staff for a second straight month, albeit the rate of job creation remained modest.”

Positive sentiment held despite inflation

As has been the case for months now, inflationary woes still kept ASEAN manufacturers on their toes.  

“Inflationary pressures also again strengthened in the latest survey period. Growing price pressures could act as headwinds to growth in the coming months and suggests that central banks across the region might maintain a tight leash on policy rates,” Baluch said.  

Input prices increased at the fastest rate since February. This means that the costs businesses pay for materials, labor, and other inputs rose quickly. 

As a result, companies are passing these higher costs on to consumers by raising their selling prices. 

The rate at which prices increased for consumers was also the highest it has been since February. This marks the fourth month in a row where prices have risen more sharply. 

Despite the looming threat of inflation, ASEAN manufacturers maintained a positive sentiment going ahead.  

At the beginning of the third quarter, expectations for the next 12 months reached their highest level in four months.