MMRD BULLETIN
February 17, 2020

Nikkei Myanmar Manufacturing PMI™

Manufacturers make strong start to 2020

Key findings:

▪ PMI lifted by sharper growth of output, new orders and jobs

▪ Output expectations strongest in six months

▪ Weak cost pressures maintained at start of 2020

Business conditions in Myanmar's manufacturing sector improved at the start of 2020, according to PMI™ survey data from IHS Markit. Moreover, the overall rate of growth strengthened following a slight loss of momentum towards the end of last year. Output, new orders and purchasing activity all increased at faster rates, while employment at manufacturers rose at a near-record pace.

The PMI rose for the first time in three months to 52.7 in January, from 52.0 in December. The latest figure signalled a solid overall improvement in manufacturing business conditions in Myanmar. It equalled the trend figure set across 2019, which was the highest for a calendar year since the survey began four years' ago.

The upward movement in the PMI in January reflected the output, new orders and employment components, which together account for 75% of the weight of the headline figure. Suppliers' delivery times (15% weight) remained broadly neutral while stocks of purchases continued to weigh on the PMI although, at 10%, it has the lowest weight of any component.

Manufacturing production in Myanmar rose for a survey-record fifteenth successive month in January. Moreover, the rate of growth accelerated to the fastest in five months, remaining well above the four-year survey average.

Production was again driven higher by growth of new work. The volume of new business increased for the fifteenth month running, and the rate of growth accelerated from December's three-month low. Manufacturers supported production by expanding their purchases of inputs in January. Like output, the rate of growth in purchasing was the fastest in five months. That said, it remained below the pace needed to maintain stocks of inputs, which declined for the eighth month in a row.

Firms continued to boost recruitment to keep on top of workloads. Manufacturing employment rose for the fourteenth month running, and at a rate that almost matched the survey record posted in May 2019. Subsequently, backlogs of work continued to fall rapidly. Firms also continued to clear out their inventories of finished goods which declined at the strongest rate in seven months.

The forward-looking Future Output Index rose to a six-month high in January, pointing to strengthening confidence in the manufacturing sector at the start of 2020. Companies commented on new products, upgraded machinery and the opening of new sites.

Comment:

Commenting on the latest survey results, Trevor Balchin, Economics Director at IHS Markit, said:

"Myanmar's goods producers started 2020 on the front foot, with growth rates for output, new orders, jobs and purchasing all strengthening in January following a slight loss of momentum at the end of last year.

"In particular, employment rose at a pace that almost matched the survey record set last May. This reflected growing confidence about the outlook, with expectations for production over the next 12 months also picking up at the start of the year.

"Manufacturers also benefited from a lack of upward pressure on their input costs during the month, allowing them to cut their own prices further in a bid to raise competitiveness."

Sources: Nikkei, IHS Markit
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