May 24, 2019

Nikkei Myanmar Manufacturing PMI™

PMI rises to one-year high

Key points:

▪ Stronger improvement in operating conditions ▪ New order growth accelerates to a 12-month high ▪ Inflationary pressures intensify

April data signaled a solid improvement in the health of Myanmar’s manufacturing sector. Overall growth was the fastest for 12 months and was supported by stronger upturns in output and new orders. Pre-production inventories also increased at a quicker pace as a pick up in client demand contributed to greater input buying and efforts to stockpile. Production across Myanmar’s manufacturing sector continued to increase in April, with manufacturers registering a stronger upturn in output. The sharp rise was the joint-fastest since April 2018 and linked to greater client demand and subsequent expansion in new orders. New business rose for the sixth consecutive month in April, with the rate of growth accelerating to a one-year high. The steep expansion was linked to greater client demand and the acquisition of new customers. On the price front, the rate of input price inflation accelerated following a scarcity of raw materials and higher supplier costs. The increase in input costs was subdued in the context of the series history, but quickened to a five-month high. Subsequently, output charges rose for the third month running. The increase in factory gate prices was only marginal, but was the fastest since December 2018 as firms partly passed higher costs onto clients. Despite a stronger upturn in new business, the rate of job creation softened and was only fractional overall. The increase in workforce numbers was the softest since January. Meanwhile, manufacturers registered a solid rise in input buying in April. The rise in purchasing activity was the fastest for 12 months as firms sought to replenish pre-production inventories following a sharp upturn in new business. Output expectations across Myanmar’s manufacturing sector remained solid in April. New product development and the adoption of new technology buoyed confidence. Although slightly down from March, the degree of optimism was one of the strongest seen over the last two years. Comment: Commenting on the Myanmar Manufacturing PMI survey data, Siân Jones, Economist at IHS Markit, which compiles the survey, said: “Operating conditions across Myanmar’s manufacturing sector improved again in April, spurred by faster expansions in output and new orders. Greater client demand supported input buying and a fifth successive monthly increase in employment. “Although inflationary pressures remained relatively muted, firms stated that a scarcity of raw materials and strain on supply chain capacity had pushed cost burdens higher. That said, more robust demand conditions allowed factory gate prices to rise at the quickest rate in 2019 so far. “Meanwhile, manufacturers’ output expectations were among the strongest for two years.” Sources - IHS Markit, Nikkei  
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