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REFILE-Factory activity expands again in Vietnam, contracts in Indonesia, Malaysia

reuters.com
(Refiles to fix formatting in tables)

SINGAPORE, Jan 3 (Reuters) - SINGAPORE, Jan 3 (Reuters) - Factory activity contracted again in Indonesia and Malaysia in December, and expanded again in Vietnam, though at a less robust pace, according to IHS Markit purchasing managers' indexes released on Tuesday.

See below for more details:

INDONESIA: Data from the Nikkei Indonesia Manufacturing Purchasing Managers' Index, compiled by IHS Markit, for December. Readings below 50.0 signal a contraction in business conditions. DATA DEC NOV OCT SEPT AUG JULY JUNE MAY APRIL 49.0 49.7 48.7 50.9 50.4 48.4 51.9 50.6 50.9 CONTEXT - Manufacturing activity contracts for a third month - Inventory depletion continues amid faltering demand - New export orders showed the steepest monthly fall since October 2015 with the rate of contraction much faster than that of total new orders. - The ratio of decline in the work backlog was sharp, accelerating to the fastest seen since August. - The rate of job losses was the fastest since August because of a combination of dismissals, linked to falling orders, and the non-replacement of retirees and contractors. - Manufacturers increased their output price for a fourth straight month due to higher input costs, despite the low inflation rate.

Pollyanna De Lima, an economist at IHS Markit, said:

"December PMI data suggest that the Indonesian manufacturing industry moved away from stabilisation at the end of 2016, with further falls in inventories and employment indicating that companies remain on a cautious footing."

"A steep drop in new export orders contributed to a faster overall decline in new business, with the domestic market also a source of weakness. Subsequently, the sector's labour market continued to suffer as job cuts have now been seen for three months in a row." MALAYSIA:

Data from the Markit Malaysia Purchasing Managers' Index for November. Readings above 50.0 signal an improvement in business conditions while readings below indicate deterioration. DATA DEC NOV OCT SEPT AUG JULY JUNE MAY APRIL 47.1 47.1 47.2 48.6 47.4 48.1 47.1 47.2 47.1

CONTEXT

* Malaysia's headline PMI unchanged in December

* Input prices see sharpest rise in series history

* New export orders contract for 6th straight month

- Factory activity falls on declining production, due to an unstable economy and declining new work inflows.

- New orders decline for 22nd straight month on softer domestic and international demand.

- Raw material costs rise on a weaker ringgit currency.

Markit economist Amy Brownbill said:

"The end of the final quarter of 2016 saw the Malaysian manufacturing sector remain in contraction territory. New orders declined at a rate little-changed from November's survey record, which led to a further contraction in production. Not surprisingly, manufacturers cut back on their buying activity and employment growth slowed to a marginal rate.

"Meanwhile, the weakness of the Malaysian ringgit continued to weigh heavily on goods producers' cost burdens, with input prices rising at the sharpest rate in the series history. IHS Markit forecasts consumer price to strengthen over the New Year, as manufacturers try to pass on their additional costs." VIETNAM: Data from the Nikkei Vietnam Purchasing Managers' Index for December.

Readings above 50.0 signal an improvement in business conditions while readings below indicate deterioration.

DATA DEC NOV OCT SEPT AUG JULY JUNE MAY 52.4 54.0 51.7 52.9 52.2 51.9 52.6 52.7

CONTEXT

* New orders and output see slower growth

* New export orders jump to the highest level since 2011

* Manufacturing sector has strengthened every month of 2016

Vietnam's December PMI dipped to 52.4, signaling a slight slowdown in the rate of expansion from the previous month due to weaker growth in output and new orders.

However, 2016 was a positive year of manufacturing industry with sector health having strengthened in every month.

New orders and output extended their upward trend but at a slower rate compared with the previous month while new export orders jumped to the highest level since data collection began in March 2011.

The rate of input cost inflation remained sharp amid reports of higher raw material costs and a depreciation of the Vietnamese dong against the U.S. dollar.

About the Vietnam PMI:

The data is collected by UK-based Markit Group Ltd MRKT.O, and the report is sponsored by Nikkei. The intellectual property rights to the Vietnam PMI are owned by or licensed to IHS Markit. For more details, click (To read more PMI reports from around the world, click on PMI-MCE-RTRS-LEN) (Reporting by Nilufar Rizki in JAKARTA, Emily Chow in KUALA LUMPUR and My Pham in HANOI; Editing by Richard Borsuk)


Keywords: SOUTHEASTASIA ECONOMY/PMI

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