The Thai Industries Sentiment Index (TISI) fell to 87.2 points in June, hitting the lowest level in 24 months as the nation struggles to restore the economy amid a risk of higher operating costs for reeling small and medium-sized enterprises, says the Federation of Thai Industries (FTI).
The June TISI, which gauged business confidence among 1,341 manufacturers across 46 industries under the FTI, fell for a third consecutive month, down from 88.5 points in May.
"87.2 points is the lowest level since July 2022," said Kriengkrai Thiennukul, chairman of the FTI.
He attributed the drop to sluggish sales, lower purchases orders and a decrease in manufacturing, amid a slow economic recovery and weak consumer purchasing power.
Thailand continues to grapple with unsolved problems, notably high household debt, which leads to a greater risk of non-performing loans in the housing and automotive sectors, as well as small and medium-sized enterprises' (SMEs) difficulty in accessing finance, Mr Kriengkrai said.
Banks' fears of non-performing loans caused them to be more cautious in granting auto loans, which partly led to a drop in domestic car sales.
During the first five months of this year, pure pickup sales plummeted by 40.8% year-on-year while sales of pickup passenger vehicles, widely known as PPVs, plunged by 42%, according to the FTI's Automotive Industry Club.
In June, Thai exports benefited from growing demand from key markets, including the US and India, as well as the baht's depreciation, but exporters still struggled to deal with a shortage of containers and higher freight fees, mainly resulting from the Red Sea tensions that caused ships to change their routes, said Mr Kriengkrai.
"We would like the government to find ways to help exporters, especially SMEs, deal with high shipping costs, because export is a key channel of revenue for the country," he said.
The federation believes the TISI will not improve significantly over the next three months as entrepreneurs are worried about the government's decision to increase the daily minimum wage to 400 baht, alongside the impact of geopolitical conflicts on energy prices.
