Thailand: Manufacturing production returns to growth in May
June 30, 2012
In May, manufacturing production expanded 5.5% over the same month last year, which contrasted the revised 0.1% contraction recorded in April (previously reported: +0.5% year-on year) and marked, in fact, the first expansion after eight consecutive contractions. The expansion overshot market expectations of a 2.5% increase and mainly reflected a robust increase in the production of cars, which soared 136% in annual terms. According to the Federation of Thai Industries (FTI), car production surpassed 200,000 units in May, which represents the highest output level in five decades. A month-on-month comparison confirms the strong growth suggested by the annual figures, as industrial output soared a seasonally adjusted 5.9% over the previous month, which was well above the 1.0% increase observed in April. The trend suggests that the manufacturing sector is gradually recovering, with the annual average variation in manufacturing output rising from minus 9.8% in April to minus 9.0% in May. The Ministry of Finance revised its growth forecasts for this year amid the faster-than-expected recovery in manufacturing output. Accordingly, the Ministry expects the economy to expand 6.2%, up from its previous 5.5% estimate in March. Meanwhile, the Bank of Thailand expects economic growth to reach 6.0% this year before decelerating slightly next year to 5.8%.