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October 16, 2019

Nikkei Myanmar Manufacturing PMI™

Modest improvement in operating conditions in September

Key points:

▪ Output and new orders rise at solid rates…
▪ … but production growth softens to six-month low
Pace of input price inflation eases to slowest since March

Manufacturers in Myanmar remained on a growth footing in September, although the latest improvement in overall operating conditions was the joint-slowest in eight months. Order book volumes rose solidly, with the rate of growth accelerating from August. In contrast, September saw a softer increase in production. Output rose at the softest rate since March. Workforce numbers continued to rise in September, with the rate of job creation accelerating to the fastest in four months. Meanwhile, input price inflation eased to a six-month low.

A key contributing factor to the modest improvement in operating conditions was a further increase in order book volumes. Growth of new business quickened from that seen in August to a solid rate, and was above the series average. Output growth, on the other hand, eased to the slowest rate in six months. That said, firms linked the solid increase to greater new order volumes and efforts to clear backlogs.

On the price front, input price inflation eased to the slowest rate seen since March. The rate of increase was relatively muted. Firms commonly linked increases to raw material shortages and greater electricity costs. Average prices charged by firms rose modestly, with the rate of inflation quickening to the fastest since November 2018.

Workforce expansion continued during September, with the rate of job creation accelerating to the quickest in four months. Employment growth was moderate overall. At the same time, the level of outstanding business declined, as has been the case in every month since June 2016. The rate of backlog depletion slowed slightly, but was solid overall.

Meanwhile, supplier performance continued to deteriorate, extending the current sequence of longer delivery times to over two years. The extent to which delivery times lengthened was greater than in August. Latest data highlighted a slower rate of growth in input buying amid raw material shortages.

Purchasing activity rose only marginally, and at the weakest pace since January. Stocks of purchases fell for the fourth successive month in September. That said, the rate of decline in pre-production inventories eased to the slowest in three months. Stocks of finished goods continued to be depleted in September, with the fall in post-production inventories remaining sharp.

Finally, expectations surrounding output over the next 12 months were relatively subdued in September. The level of positive sentiment fell to its lowest in five months. Panellists linked positive sentiment to planned investment and business expansions.

Comment:

Commenting on the latest survey results, Lewis Cooper, Economist at IHS Markit, said:

“September’s headline PMI figure, signalled another modest improvement in overall business conditions in Myanmar.”

“Positively, both output and new orders saw a solid increase, with the rise in order book volumes quickening from August. That said, the rate of output growth eased to a six-month low, as manufacturers’ expectations towards the next 12 months dipped.

“Supplier shortages continued to weigh on purchasing growth, with pre-production stocks falling as firms sought to bridge the gap and sustain production.”

Sources: Nikkei, IHS Markit

 

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