November economic data offers some encouraging signs despite 13% drop in exports

November economic data released by the Bank of Thailand (BOT) last Friday showed some signs of improvement despite overall softness in the economy. The manufacturing production index grew by 0.1% in November helped by strong demand for vehicles, auto parts and construction materials. Exports, however, fell 12.8% yoy to US$5.27bn although this was better than the 14.3% yoy decline seen in October. Although imports fell at a slower rate of 8.7% yoy, the country recorded a trade surplus of US$182mn compared to US$275mn the previous month. Meanwhile the current account balance widened from October to US$537mn, aided by stronger-than-expected tourism receipts.

• Production: The seasonally-adjusted manufacturing production index rose to 114.7 in November, the highest of the year. For the first 11 months of 2001, manufacturing posted a gain of 1%. Sectors recording the fastest growth rates were vehicles and parts, and construction materials. Sectors which showed declines included electronics and electrical appliances, textiles, and iron and steel. Industrial capacity utilization in November was 54.5%, almost the same as the previous month.
• Consumption: Most indicators showed increases compared to the same period in 2000. Sales of passenger cars and motorcycles each grew by more than 22%. Consumer goods imports, however, fell 9.4% yoy, similar to the decline registered in October.
• Private investment: A major surprise was the 29% surge in cement sales – the highest monthly increase in nearly eight years. This was due to the revival in the housing market as well as government spending on infrastructure projects. Another encouraging sign was the 12.1% yoy growth in commercial car sales – the high monthly increase in seven months. On a less promising note, however, was the 14.5% yoy decline in capital goods imports, the sixth consecutive monthly decline in this indicator.
• External sector: The impact of the September 11 terrorism attack is still being felt on Thailand’s export industry. Exports in November dropped by 12.8% yoy to $5,276mn – the third consecutive double-digit decline. Although imports fell at a slower rate of 8.7% yoy to $5,094mn, the country was able to record a trade surplus of $182mn and a current account balance of $537mn. Thailand achieved a balance of payments surplus of $658mn despite debt repayments of $290mn by the BOT, indicating that there were sizeable net inflows of equity and investment funds during November.