Factory output rises 3.36% in September, lower than market expectations

Thailand’s manufacturing production index (MPI) expanded by 3.36% year-on-year in September, thanks to rising economic activities, tourism recovery and export expansion, the Ministry of Industry said.

The market was expecting a growth rate of at least 6%, following a 14.92% expansion in August.

The MPI increased to 97.9 index points in September from 95.71 in August with a capacity utilization (CapU) rate of 63.18% in September compared to 63.72% in August.

For Q3 of 2022, MPI grew by an average of 8.06% year-on-year with an average CapU of 62.55%.

For the first 9 months of 2022, MPI grew by an average of 2.83% year-on-year with an average CapU of 63.4%.

“The overall export had expanded for 19 consecutive months while the export of industrial products had expanded by 22 consecutive months and we expect the dissipating global microchip shortage problem to continue to support the export of automobiles,” said Deputy Permanent Secretary of Industry Worawan Chit-arun.

factory output rises 3.36% in september, lower than market expectations

The ministry said the retuning of economic activities after the Covid-19 pandemic in September is leading to more demand for products, especially petroleum and tourism-related products such as beers, clothing, bags, shoes and jewelry.

The outputs of motorcycles, palm oil, automobiles, petroleum products and electronic components/circuit boards have increased by 72.69%, 34.41%, 25.68%, 21.68% and 10.59% respectively.

factory output rises 3.36% in september, lower than market expectations

Headline inflation also slowed down to 6.41% year-on-year in September from a 14-year high of 7.86% in August but the high level of inflation is still affecting production costs.

The ministry said the export of industrial products was doing well in September, thanks to the expansion of demands from the United States, ASEAN countries and the European Union.

The ministry expects the MPI for 2022 to expand by 1.5-2.5% year-on-year, compared to the previous predation of 2.5-3%. The gross domestic product of the manufacturing sector is expected to expand by 2-3%, compared to the prior prediction of 2.5-3.5%.

The ministry said manufacturers are still concerned about the fluctuation of global energy prices from ongoing geopolitical conflicts and the slowing down of major trading partners’ economies such as the US, EU, China and Japan.

The flooding situation over the past 2 months had minimal impact on manufacturing outputs. Still, there could be a shortage of raw materials for the processed food sector as farmlands were affected. The shortage could last for 1-3 months, the ministry said.