By KEVIN WONG / Graphic By TMR

THE Nikkei Asean Manufacturing Purchasing Managers’ Index (PMI) dropped to 50.5 in September from 51 in August this year, which signals another marginal improvement in the health of the manufacturing sector in the region despite at a slower pace.

The September data took the average quarterly PMI reading to 50.6, which was lower than the average seen over the previous quarter of 51.2.

In a statement yesterday, IHS Markit noted that the data showed a slower growth in both output and new orders, while export sales have declined further.

Malaysia came in second followed by Vietnam and both countries registered a noticeable slower expansion in its goods-producing sector after topping the rank, it said.

The Philippines, however, topped the ranking as it had a marginally quicker improvement in operation conditions, while Indonesia dropped to fourth position following a slower improvement in operation conditions.

On the other hand, Thailand stagnated with its manufacturing sector. Both Singapore and Myanmar had continued to signal a decline in the health of their manufacturing sectors.

IHS Markit also stated that the overall manufacturing performance across the region remained uneven.

“Four of the seven monitored countries that indicated an improvement in manufacturing conditions in September, were unchanged from August.

“In addition, the September survey brought signs of softening client demand. Meanwhile, growth in total new business eased from August as exports fell for the second consecutive month,” it noted.

IHS Markit added that softer market demand conditions were accompanied by the weakest rate of output expansion for six months, while firms cut back in purchasing activity for the first time this year.

Despite higher orders, IHS Markit stated that there appeared to be a little pressure on operating capacities while on the contrary, the level of unfinished work continued to decrease.

Job creation were sustained in September, which extended the trend of rising employment to six months — the longest seen in the survey history, it added.

Meanwhile, the global information provider observed that strong cost pressures persisted across the region which accelerated input price inflation to the fastest for almost 1½ years.

It added that six of the seven countries continued to report higher cost burden at the end of the third quarter (3Q), while Thailand recorded a reduction in input cost.

IHS Markit principal economist Bernard Aw said the manufacturing upturn across Asean lost momentum at the end of the 3Q, on top of slower growth seen in both new orders and output, while export sales declined further.

“Although confidence a round future output remained positive and job creation continued, other survey indicators raised doubts about the sustainability of the current expansion, inventories fell further and Asean manufacturers have scaled back on input purchases.

“Furthermore, strong cost pressures persisted across the region, with several countries reporting sharp increases in input prices due to unfavourable exchange rates against the US dollar,” he said.