Thailand's Manufacturing Production Index (MPI) dipped by 1.5% year-on-year in May to 98.3 points, underscoring the sluggish manufacturing sector despite an increase in exports, says the Office of Industrial Economics (OIE).
The decrease is mainly attributed to a sharp drop in domestic car sales, especially in the pickup category, and almost no new orders for fashion clothing in the garment industry.
"The automotive and garment industries turned sluggish amid an economic downturn in the country and uncertainties following geopolitical conflicts overseas," said Warawan Chitaroon, director-general of the OIE.
Economic circumstances in Thailand remain downbeat for households and businesses as energy costs are elevated, while household debt is high, causing banks to be more selective about granting car loans.
However, exports in certain industries such as computers, printers, aluminium and wood products increased.
Shipments of industrial goods excluding gold grew by 2.9% year-on-year in May for the second consecutive month, according to the OIE.
Economies in the EU and Japan signalled positive signs as their manufacturing sectors were projected to improve in the future, she said.
One contributor to the May MPI was palm oil manufacturing, which expanded by 19.8% year-on-year. The increase resulted from the impact of drought and strong sunlight, making palms ripen more quickly, eventually increasing output for manufacturers, said Mrs Warawan.
Demand for palm oil also increased this month.
Steel and iron production increased by 8.1% year-on-year, partially as the result of more spending on the products for state development projects.
For the first five months this year, the OIE reported the MPI decreased by 2.08% year-on-year to 98.1 points, with capacity utilisation at 59.3% during the period.
She said she expects the MPI in June will continue to decrease because of the ongoing decline in domestic car sales, as well as weak consumer purchasing power.
A positive factor is state budget spending, which should increase economic activities in the second half of this year, said Mrs Warawan.
The OIE said last month it expects the MPI for 2024 to remain flat or gain 1% year-on-year, a downgrade from earlier projections of 2-3% growth.
