Asean outpaces global growth in May: IHS Markit

Asean manufacturing conditions improved at a stronger pace, even as an increasingly broad-based slowdown has resulted in the slowest clip of global economic expansion in three years, said IHS Markit.

At 51.2 in May compared to 52.1 in April, the JPMorgan Global Purchasing Managers' Index (PMI), compiled by IHS Markit, fell for a second successive month to signal the slowest expansion of global output since June 2016.

The PMI is a measure of the projected direction of economic trends in manufacturing. PMI readings above 50 point to expansion while those below 50 signal contraction.

Business sentiment about the year ahead meanwhile slipped to its lowest since comparable data were first available seven years ago.

In the Asean region, however, manufacturing conditions improved at a stronger pace, driven by quicker expansions in output and new orders. Five of seven monitored countries reported stronger operation conditions.

Indonesia's PMI came in at 51.6, its highest in nine months, signalling a further improvement in manufacturing conditions and pointed to a brightening economic picture for the second half of the year in a post-election environment.

Meanwhile, the PMI settled at 50.7 with growth in the Thai manufacturing sector extending into the middle of the second quarter, supported by a further strengthening of demand conditions. New orders rose for a fourth straight month during May. More importantly, export sales increased at the fastest pace since early-2018, providing hopes that the recent weakness in export growth has bottomed out.

In the Philippines, the PMI rose for the first time in six months to 51.2, which signalled a stronger improvement in the health of the Filipino manufacturing sector. A quicker rise in new orders drove the upturn, suggesting that demand conditions are strengthening.

Additionally, the Malaysian PMI lost a little ground in May, coming in at 48.8, but it remained well above the lows seen earlier in the year. This hints that the worst is hopefully over for Malaysia's manufacturers. An improvement in companies' future output expectations to the highest for five-and-a-half years adds to signs that the business environment has started to brighten again.

Improving customer demand drove the latest expansion for the Vietnamese manufacturing sector, with the PMI averaging 52.0. Higher output requirements prompted firms to raise purchasing activity and accumulate more input stocks.

The health of the Myanmar manufacturing sector strengthened further in May, with the headline PMI hitting 54.2, the highest since April last year. Growth was supported by greater demand and increased hiring. However, the upturn was marred by higher cost increases, with input cost inflation at a six-month high.

For Singapore, its private sector economy expanded further in May, but at a slower pace, with the PMI dipping to 52.1. A particular concern was the first decline in export orders seen in three months amid rising global trade uncertainty.