Thailand PMI Trends July 2023

In July 2023, the S&P Global Thailand Manufacturing Purchasing Managers' Index (PMI) experienced a decline, dropping to 50.7 from its previous reading of 53.2 in June. This downturn marked the 19th consecutive month of growth in factory activity, but the current figure represents the slowest pace of expansion seen since June 2022. This shift in momentum can be attributed to multiple factors, including a notably restrained increase in output, a moderation in foreign sales, and a decline in new orders after a period of growth during the preceding June quarter.

Notably, the rate of output growth witnessed a notable deceleration, marking the most subdued expansion in 19 months. Alongside this, foreign sales displayed a decrease in their growth rate, indicating a tempering of demand from international markets. Moreover, the new orders that had shown growth during the June quarter took a downward turn, implying a potential softening of demand dynamics.

The employment landscape within the manufacturing sector also underwent changes. Firms made adjustments to their workforce levels, leading to a reduction in employment. Additionally, backlogged work, which had experienced an increase in the previous month, contracted during this period.

Despite these challenges, manufacturers continued to elevate their purchasing activities in response to escalating production requirements. However, this growth in purchasing activity was curtailed due to the relatively lower influx of new work.

Another trend to note is the shortening of delivery times, which persisted for the fourth consecutive month. This could be indicative of enhanced operational efficiency within the supply chain, resulting in faster delivery of goods.

Turning to the cost dynamics, there was a notable development. Input prices, which had been on an upward trajectory, experienced a decrease for the first time since September 2020. On the other side of the equation, selling charge inflation reached its lowest point in nearly two years, dipping below the series average. These shifts in cost dynamics could signal a moderation in inflationary pressures within the manufacturing sector.

Finally, sentiment within the manufacturing landscape declined, reaching its lowest point in a year and a half. This weakening sentiment was primarily attributed to concerns surrounding both economic conditions and the political environment. The interplay of these factors influenced manufacturers' outlook on future business prospects.

In summary, the S&P Global Thailand Manufacturing PMI for July 2023 depicted a slowdown in factory activity growth, despite the 19th consecutive month of expansion. The softer pace of growth was evident in various aspects, such as output, foreign sales, and new orders. Workforce adjustments and changes in backlogged work further contributed to the evolving manufacturing landscape. While manufacturers continued to respond to production needs through purchasing, this growth was moderated by a decrease in new work. The dynamic of shorter delivery times also persisted. On the cost front, input prices experienced a decline, while selling charge inflation reached a multi-year low. The decline in sentiment was influenced by economic and political concerns. These multifaceted trends collectively characterize the nuanced state of Thailand's manufacturing sector in the given period.