Thailand: Manufacturing production slumps in October as floods intensified during the month
November 30, 2011
In October, manufacturing production plummeted 35.8% over the same month last year, which followed the 0.3% contraction recorded in September and marked the sharpest slump in over a decade. Output tumbled far more sharply than the 15% drop expected by market analysts. The contraction was broadly based and reflected the impact of the floods that swamped seven industrial states as well as Bangkok. Manufacturing of hard disks slumped 52.4% in October (September: -6.9% yoy), while shortages of components have spread across the electronics industry. Production of motor vehicles swung from a 28.2% increase in September to a 62.0% contraction in October, which has also hurt auto-related industries, such as plastics and rubber. Thailand produces about a quarter of the world's hard disk drivers and serves as a production hub for Japanese car makers and electronics firms. A month-on-month comparison points to an even more pronounced collapse than suggested in the annual figures, with manufacturing production plunging 35.37% in seasonally adjusted terms, which followed the 4.09% drop tallied in September. The monthly result represented the steepest decline since records began. As a result of the devastating contraction in October and the resulting stock shortages in the Thai supply chain, it is expected that the manufacturing sector will experience a protracted recovery instead of a V-shaped rebound. The annual average variation in manufacturing output fell from minus 0.1% in September to minus 3.6% in October, which marked the second consecutive month of growth mired in the red since manufacturing production started to show positive growth rates back in February 2010.
Author: Ricardo Aceves, Senior Economist