Thailand's manufacturing sector contracts amid lackluster demand

Thailand's manufacturing sector contracted in December 2021 due to lackluster demand amid a slow economic recovery, a survey showed Tuesday.

The country's manufacturing Purchasing Managers' Index (PMI) fell to 49.5 in December from 50.6 in November, a signal of a deterioration in the health of the country's manufacturing sector, according to the IHS Markit, a London-based global information provider that compiles the index.

A PMI reading above 50 indicates an expansion of the manufacturing sector compared to the previous month, while that below 50 represents a contraction.

The PMI in December, after a two-month expansion as Thailand's manufacturing sector improved following the easing of COVID-19 restrictions, was weighed by weak demand and employment conditions, said Pan Jingyi, economics associate director at IHS Markit.

However, Pan noted that overall business confidence rose in December, which was a heartening sign for the Thai manufacturing sector. "It will be important to see this optimism translate into actual improvements in both demand for goods and in hiring activities going forward," she said.

A breakdown of the index showed Thailand's manufacturing output continued to expand in December, albeit easing further from the October record. Higher raw materials and transportation costs drove the increase in overall prices, which had a negative impact on new orders, according to the survey.