Philippines, Indonesia tie for 2nd place in ASEAN factory growth rankings

MANILA, Philippines — The Philippines’ manufacturing activity registered a “quicker” pace of growth in August, sharing the second place with Indonesia while factory growth in Southeast Asia regained some momentum in the middle of the third quarter, according to monthly tracking done by IHS Markit for Nikkei, Inc.

The Philippines chalked up a “modest increase” of 51.9 Purchasing Managers Index, or PMI. The reading was the same as Indonesia’s PMI and was not enough to dethrone Vietnam, which posted a “solid” growth of 53.7.

The PMI provides a quick overview of the national performance in the manufacturing sector by tracking variables such as sales, employment, inventories and prices.

Nonetheless, the Philippines’ factory growth in August was above Southeast Asia’s headline PMI of 51, an improvement from July’s 50.4 that hovered above the 50-point line separating expansion from contraction.

“Manufacturing conditions across ASEAN improved at a faster pace in August, with growth in output and new orders both gaining momentum. Employment growth was also stronger,” said Bernard Aw, principal economist at IHS Markit.

“However, the overall upturn was not as broad-based as in previous months,” Aw added.

Behind the Philippines and Indonesia was Malaysia, which posted a “modest” increase of 51.2.

Meanwhile, Thailand landed in the fifth spot after registering a “marginal” decrease of 49.9, followed by Singapore’s 48.5, a “modest” dip.

Myanmar, which suffered a “solid” contraction of 46.4 in August, settled at the bottom of the ranking of seven select Southeast Asian countries, signaling a decline in the health of the country’s manufacturing sector.

“ASEAN manufacturers continued to struggle with increased cost burdens, particularly countries with a weaker exchange rate against the dollar, such as Myanmar, Indonesia and the Philippines,” IHS Markit’s Aw said.

“All these challenges raise questions over whether the growth pickup in August is sustainable in coming months,” Aw added.