Industrial sentiment index sinks to 2-year low in Nov
The political unrest that started at the beginning of November has sunk manufacturing confidence that month to its lowest in two years and the Federation of Thai Industries' forecast for economic growth to a dismal 2.5 per cent this year, with operators
FTI chairman Payoongsak Chartsuttipol said yesterday that the Thai Industries Sentiment Index (TISI) fell to 90.3 in November from 92.8 in the previous month due to lower purchase orders, sales, production and performance.
The survey was conducted on 1,023 manufacturers in 42 industries. About 31.1 per cent were small businesses, 42.1 per cent medium-sized businesses and 26.8 per cent large businesses.
November’s drop came after manufacturers became concerned about the political situation that tended to be prolonged and clearly affected the economy. Purchasing power weakened, leading to lower purchase orders and sales.
Given the protracted political unrest, the economy is expected to expand slower than expected at 2.5 per cent this year and 3 per cent next year, against the estimate of at least 3 per cent this year and 5 per cent next year.
"The recent parliament dissolution may lead to no disbursement of Bt2 trillion investment next year and that has eroded investors’ confidence and the country might see a shortage of capital to support the economy. Therefore, next year’s growth is expected to be lower than estimated earlier," he said.
Based on a recent inspection, imports of raw materials and capital goods began to decline, sending a clear signal for the possibility of lower purchase orders next quarter and that would likely lead to lower capacity utilisation. In October, local purchase orders dropped 4 per cent on political concerns.
Liquidity crunch
Manufacturers want all parties to end the political conflicts very soon, he said, adding that SMEs have suffered a liquidity crunch, which delayed their investment. Manufacturers’ confidence in the next three months also dropped with the three-month TISI edging down to 101.4 from 102.4 in October. November’s confidence indices for all sizes of businesses went down.
Small-business confidence dropped to 85.9 in November from 90.9 in the prior month on lower purchase orders, sales, production and performance.
November’s confidence index for medium-sized businesses also inched down to 91.5 from 92.3 due to lower purchase orders, sales, production, costs and performance. However, the three-month index climbed up to 102.0 from 100.7 in October.
Large businesses saw their confidence index slide to 93.8 in November from 95.7 due to lower purchase orders, sales, production and performance.
