Mixed Performance Among Regional Asean Countries During the Month

The Asean manufacturing PMI fell by 0.9 points to 49.9 in December, trending below 50-level threshold, which was also the lowest index posted since July 2017. The sharp drop in Asean manufacturing PMI was led by Indonesia, which fell from 50.4 in November to 49.3 in December. According to IHS Markit, this was due mainly from weak operation condition, which contributed partly from lower output and new orders on subdued demand. This was followed by Malaysia, which also deteriorated from a high of 52 in November to 49.9 in December, where rising output was offset by contraction in new orders. However, on a positive note, future output index over the next 12- month for both countries continued pointing towards optimism.

Meanwhile, Philippines’ manufacturing PMI held steady at 54.2 in December, albeit slower than the previous month. Thailand and Vietnam’s PMI showed better manufacturing PMI index durng the month, where both rose by 50.4 and 52.5 respectively. Improvement in output and new orders contributed to expansion in manufacturing sector for both countries. Going into 2018, as the sharp slowdown in Asean manufacturing PMI may be temporary, we believe Asean’s manufacturing sector will likely improve in the months ahead, as the region major trading partner, China in particular, continued to sustain solid growth momentum in the manufacturing sector. Based on IHS Markit and Caixin, China’s general manufacturing PMI rose to 51.5 in December, the highest since August. Similarly, US manufacturing PMI also increased in the fastest pace since March 2015 to 55.1 in December.

Separately, Singapore released its advance GDP estimate for fourth quarter 2017. According to Singapore Ministry of Trade and Industry, Singapore’s GDP expanded by 2.8% qoq on an annualized and seasonally adjusted basis in 4Q17, but lower than 9.4% qoq revised in 3Q17. On year-on-year basis, GDP slowed from a revised of 5.4% yoy in 3Q17 to 3.1% yoy in 4Q17. Nonetheless, this was higher than market expectations of 2.6% yoy expansion.

The higher-than-expected growth was attributed to services sector, but was dragged down by construction sector, which contracted by 8.5% during the quarter. For the full year 2017, based on advance estimate, real GDP growth expanded by 3,5%, in line with official forecast of about 3.0 to 3.5%. For 2018 Monetary Authority Singapore (MAS) is projecting the country’s real GDP to expand in a range of 1.5 to 3.5%.

Source: Affin Hwang Research - 5 Jan 2018