Quicker expansions in both output and incoming new orders were recorded. Growth in production requirements supported a stronger uptick in purchasing activity, which in turn led to a greater accumulation of pre-production inventories.

However, improving underlying demand trends also resulted in an intensification of inflationary pressures, which hit a three-month high, S&P Global said in a release.

The headline S&P Global ASEAN manufacturing PMI printed a 13-month high of 51.7 in May, up from 51 in April, signalling a sustained and stronger improvement in the health of the ASEAN manufacturing sector.

A quicker rise in new factory orders was recorded in May, driven by domestic demand. The rate of growth was the fastest in 13 months. However, a notably softer contraction in new export sales was also observed in the latest survey period.

Manufacturers across ASEAN further increased their production volumes. In fact, output was raised at a strong rate, which was the most marked since April 2023.

Input buying rose at a sharp pace during May. The upturn was the second-strongest since the current run of expansion began in November 2023, and underpinned a stronger rise in pre-production inventories, after growth broadly stalled in April.

Holdings of finished items depleted again in the month. The downturn gathered pace and was the strongest in the year to date, indicating that some manufacturers opted to sell directly from their holdings to meet production requirements.

Cost burdens and output charges rose at the strongest rates since February.

Employment fell for the second straight month in May. The downturn moderated slightly since April and was marginal overall.

At the same time, backlogs rose for the third successive month, the latest upturn being the most pronounced in a year.

The data was indicative of rising capacity pressures, with ASEAN manufacturers struggling to keep on top of their growing workloads, especially as employment remained in retrenchment mode.

Looking ahead, ASEAN manufacturing companies remained optimistic about their overall prospects for higher output in the year ahead. Confidence levels strengthened, after having slipped to a nine-month low in April.

Fibre2Fashion News Desk (DS)