Southeast Asia’s factory activity bounces back from 11-month low

Southeast Asia's manufacturing sector demonstrated a resurgence in July, as the region's purchasing managers' index (PMI) rose to 52.8, marking its strongest pace in over an 11-month period. The improvement was evident across multiple countries, with Thailand and Vietnam leading the charge with readings of 54.2 and 52.9 respectively.

The data revealed that firms were ramping up their purchasing activity and employment, while business confidence soared, particularly among manufacturers who cited optimism about production growth for the first time in over three years.

All ASEAN economies, except Myanmar, reported expansionary readings, signaling a shift away from the softer patch experienced between March and June, which was largely impacted by the Middle East conflict. Maryam Baluch, an economist at S&P Global Market Intelligence, noted that the region's manufacturing sector had seemingly overcome this challenging period, performing at a level akin to early 2023, though not quite matching the record set in February.

In North Asia, major manufacturing hubs also maintained an expansionary trajectory, with the PMI remaining well above the 50-point threshold indicative of growth. Manufacturers in the region pointed to a reduction in Middle East tensions and sustained demand for AI-related electronics as factors contributing to the increase in new orders.

This positive trend contrasts sharply with China, where factory activity unexpectedly contracted in July, with the official PMI falling to 49.2, below all estimates. This data, as released by Bloomberg, marked a deviation from expectations, highlighting a disconnect between regional manufacturing dynamics and the broader global economic narrative.