Exports are expected to improve for the rest of the year, but the key electronics sector will still show a year-on-year decline, says the Office of Industrial Economics (OIE).
Director-general Somchai Harnhirun said exports in the last three months will probably improve due to seasonal demand, especially from European and US manufacturers.
August's manufacturing price index (MPI) fell by 3.12% from 178.91 basis points last year to 173.33, while it was down 0.54% from 174.27 in the previous month.
The electronics sector contracted in both production and sales from last year, especially integrated circuits, Mr Somchai said.
Nonetheless, hard disk drive production improved for the first time in eight months, surging 6.49% month-on-month and 2.12% year-on-year.
Air conditioners also saw a surge of 3.46% from last year thanks to growth in the property sector.
"The difficulty with this year's MPI is we're comparing it with last year, which was artificially inflated due to the post-flood production increase to meet orders and the boost from the first-time car buyer scheme," Mr Somchai said.
He said the manufacturing sector is unlikely to experience a repeat of the 2011 floods that disrupted the supply chain. Even if it does, manufacturers are better prepared.
The OIE has maintained its MPI growth target at 0.5% to 1% this year due mainly to an increase in garment exports to Japan, while automobile production will likely meet the target of 2.5 million vehicles.
The MPI is targeted to return to the pre-flood level next year, which will be a more accurate indicator.
In a related development, the Electrical and Electronics Institute (EEI) said factories located in flood-prone areas have yet to be affected by flooding.
There are 121 electrical and electronics factories in three industrial estates in Ayutthaya and 65 others in two estates in Pathum Thani.
Chirapat Popuang, the EEI's senior director of information and technical services, said if flooding spreads, there may be obstacles for logistics.
The EEI has maintained this year's forecast of a 3% decrease in export value from 2012 as a result of the sluggish Chinese economy.
The Customs Department said electrical and electronics exports totalled US$31 billion in the first seven months of 2013, down by 1.9% year-on-year.
Electrical appliances and parts exports were relatively unchanged at $13.3 billion, while electronics and parts slid by 3.3% to $17.8 billion.
Exports to China fell by 29% year-on-year. The US and Asean each made up 17% of total shipments, with 14% going to the EU.
Electrical and electronics exports accounted for 23% of Thailand's shipments from January-July.
The EEI warned that exports to Europe worth $7.17 billion will be hurt if manufacturers cannot comply with the EU's energy-related product directive over environmental impact.
Enforced in 2009, the directive covers 38 energy-related products except transport items.
The EEI estimates if the directive is fully enforced within 3-5 years, 72% of electrical and electronics products shipped to the EU will be affected.