February 18, 2019
▪ Production and new orders remain in solid growth territory
▪ Output charges decrease amid slower rise in input costs
▪ Business confidence subdued
Operating conditions across the Myanmar manufacturing sector improved for the third month running in January. The latest data signalled a moderate rise in overall growth supported by sustained upturns in output and new orders. Despite a solid expansion in new work, business expectations among manufacturers remained historically muted. Pressure on capacity remained low as backlogs continued to decline sharply. As a result, the rate of job creation softened and was only fractional. On the price front, output charges fell for the first time since July 2016 amid the slowest rise in input costs in the series history.
Production continued to expand among goods producing firms in January. The solid rise in output was generally attributed to higher new order volumes and extended the current sequence of growth to three months.
Similarly, new business increased at a solid but slower rate in January. A broad-based rise in client demand from the domestic market was reportedly behind the latest upturn in new orders. The rate of expansion was above the series trend, but the slowest in the current three-month sequence of growth.
Manufacturing firms registered a marginal increase in input costs in January. Manufacturers responded to record low rises in input costs by dropping their factory gate charges. Output prices fell for the first time since July 2016 in January and at a moderate rate. This contrasts with the sharp increases seen through 2018.
Despite a solid rise in new business and easing cost pressures, goods producers in Myanmar noted a muted degree of confidence towards output over the coming year.
Finally, purchasing activity increased for the first time since last May, with panellists subsequently depleting pre-production inventories at only a fractional rate. Solid new order growth was commonly linked to the rise in input buying. Moreover, vendor performance deteriorated marginally amid transportation difficulties.
Commenting on the Myanmar Manufacturing PMI survey data, Siân Jones, Economist at IHS Markit, which compiles the survey, said:
“January data signalled a further improvement in operating conditions across the Myanmar manufacturing sector. Although rates of expansion softened slightly, output and new orders increased for the third month running.
“Notably, price pressures eased significantly compared to those seen throughout 2018. The rate of input cost inflation dipped to a series low and resulted in the first fall in factory gate charges since July 2016.
“On a less positive note, business expectations among manufacturers remained historically subdued despite further upturns in production and new business.”
Sources: Nikkei, IHS Markit
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