Macro/ Strategy

Manufacturing continued to grow despite concerns over tariff impact

In the first 5 months, the industrial production index (IIP) increased by 8.8% YoY. In May, the IIP grew by 9.4% YoY and 4.3% MoM. The growth rate of the four manufacturing sectors – (1) mining, (2) manufacturing, (3) electricity production and distribution, and (4) water supply, waste and management – were 1.22% YoY, 11.3% YoY, 3.34% YoY and 11.0% YoY, respectively. The PMI recovered to 49.8 points in May from a low of 45.6 in the previous month. The 90-day tariff delay helped manufacturing recover, although the survey sentiment had concerns over the tariff impact.

Going details into the growth of the manufacturing sector in the IIP, the growth of the group related to export; like electronic products, computers and optical products; were weaker than the overall growth. In May, this group increased by 8.3% YoY, lower than the 11.3% YoY of the manufacturing sector. On the positive side, the domestic production group showed its resilience by achieving the high growth. Production groups; like motor vehicles, transportation, repair and maintenance; had high growth rates of 27.1% YoY, 36.6% YoY and 29.7% YoY respectively.