Kuala Lumpur, 3 March 2026 – The ASEAN manufacturing sector expanded at its fastest pace on record in February, driven by strong new orders and increased production activity, according to the latest Purchasing Managers’ Index (PMI) data from S&P Global.
The headline ASEAN Manufacturing PMI climbed to 53.8 in February, up from January’s figure and comfortably above the 50.0 threshold that separates contraction from expansion. The reading marked the strongest growth in manufacturing conditions since the regional PMI series began, indicating robust demand and heightened operating activity across key Southeast Asian economies.
Drivers of Expansion: Demand and Output
The February PMI survey showed that new orders increased sharply, reflecting resilient domestic demand and improving export activity. Strong intake of new business led manufacturers to boost production levels in response to expanded order books.
Several ASEAN countries reported higher output levels, with firms citing better sales performance and customer enquiries. This growth trend was supported by inventory restocking and new product investments, signalling confidence among regional manufacturers.
Labour and Input Trends
Manufacturers also noted continued job creation, with employment levels rising modestly in February. The improvement in workforce numbers was driven by efforts to cope with growing workloads and production schedules.
On the input side, the survey reflected moderate inflationary pressures, with costs rising but remaining manageable. Supply chain performance also improved compared with earlier months, with many firms reporting shorter delivery times for key inputs.
Output Expectations Positive
Looking ahead, business sentiment among manufacturers remained positive, with many respondents expecting further expansion in activity over the coming months. Confidence was supported by expectations of stronger demand, improvements in global trade flows and continued policy support from regional governments.
Regional Implications
The surge in the ASEAN manufacturing PMI highlights the resilience of the region’s factory sector, which has benefited from shifts in global supply chains and increasing foreign investment into Southeast Asia.
Economists say the strong PMI reading could signal broader momentum in economic growth across ASEAN, particularly as manufacturing acts as a key driver of exports, employment and industrial output for many economies in the bloc.
However, analysts caution that ongoing geopolitical tensions and global economic headwinds, including currency volatility and external demand uncertainty, could temper growth prospects if risks intensify. Market observers will closely watch upcoming trade and industrial data for further confirmation of the sector’s trajectory.
