In a note today, IHS Markit said Asean manufacturers reported their worst month on record in March as operating conditions deteriorated at the sharpest pace since the survey began in July 2012 amid record declines of output, new orders, inventories and employment.
"The headline PMI fell from 50.2 in February to 43.4 in March, to signal a renewed deterioration in the health of the Asean manufacturing sector. Moreover, the figure was the lowest in the survey’s near eight-year history and indicative of a marked downturn. All of the survey indicators hit a record low, with substantial rates of decline reported for output and total new orders,” IHS Markit said.
IHS Market said the Asean Manufacturing PMI is compiled from responses to monthly questionnaires sent to purchasing managers across some 2,100 manufacturers in Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. A reading above 50 indicates an overall increase compared to the previous month while a reading below 50 shows an overall decrease.
It said the Malaysia Manufacturing PMI fell to 48.4 in March, from 48.5 in February.
"At the country level, deteriorations were reported in each of the seven constituent countries. The downturn was most marked in Singapore, with the headline figure slipping a record 18.1 points from February to 27.7, the lowest in the series near eight-year history. The Philippines also registered a deterioration in March, with the headline index (39.7) posting below the 50.0 no-change mark for the first time since the survey began January 2016.
"Elsewhere, Vietnam recorded a back-to-back contraction, with the headline index falling to the lowest on record at 41.9 in March, and signalling a steep decline in the health of the manufacturing sector. Similarly, Myanmar registered a deterioration in operating conditions for the second month running. The headline figure (45.3) was the lowest since the survey began in December 2015, amid record contractions in output, new orders and inventories. Concurrently, Indonesia returned to contractionary territory following an expansion in February. March's headline figure (45.3) was an all-time low and signalled a solid deterioration in the health of the sector. Thailand too recorded a marked decline in operating conditions, amid quicker falls in both production and new orders. The headline index (46.7) was also a record low.
"Finally, Malaysia's downturn continued during March, with operating conditions deteriorating at the steepest rate since September 2019. That said, the decline was only mild overall,” IHS Markit said.
IHS Markit economist Lewis Cooper said in the note that Asean manufacturers felt the full force of the coronavirus in March.
"The headline PMI dropped to the lowest in the survey’s near eight-year history, amid record contractions of output, new orders, inventories and employment. Notably, March was the first time on record that all of the seven constituent countries posted a deterioration in the health of their respective manufacturing sectors simultaneously. Restrictive measures stemming from efforts to contain the Covid-19 outbreak and substantial uncertainty surrounding the outlook also eroded firms output expectations during March. Sentiment was the lowest since the series began in mid-2012, although firms still remain, on average, optimistic output will increase over the next 12 months.
“Overall, March highlighted the worst performance of the Asean manufacturing sector on record, as repercussions from the Covid-19 pandemic are realised, and indeed it is likely that they will be felt for several months to come, if not longer,” Cooper said.
Source: The Edge Markets