Industrial confidence index dropped in December 2023

Chatrudee Theparat

Industrial confidence index dropped in December 2023

The Industrial confidence index fell in December due to a slowdown in production output during the New Year period.

Kriengkrai Theinnukul, chairman of the Federation of Thai Industries (FTI), and Montri Mahaplerkpong, vice chairman of FTI, said the industrial confidence index survey for December 2023 found its result fell to 88.8 from 90.9 in November.

The industrial confidence index is based on sources of information, including orders, sales, production volume, and operating results, decreased. The industrial confidence index faced a drop due to risk factors in the production sector due to lower production output, hit by shrinking working days and the longer holiday period during the New Year Festival.

Manufacturers previously accelerated their production output. But they have met the ongoing hardship. One of them is consumers' purchasing power has not fully rebounded, hit by high household debt levels, which currently remains stable. Ongoing price competition has also worsened the situation, and the construction sector has suffered from a slowdown, particularly from government construction projects, resulting in lower demand for construction materials.

For the export, freight rates increased due to the Houthi group in Yemen affecting commercial shipping vessels passing through the Red Sea. This impact is especially noticeable in transportation between Asia and Europe. Despite these challenges, positive factors during the New Year festival and the expansion of the tourism sector contribute to more optimistic outlook. Simultaneously, the export sector is displaying improvement as demand from trading partners gradually recovers. Additionally, government energy price subsidies have played a role in reducing costs for operators.

According to a survey conducted by the Federation of Thai Industries (FTI) in December 2023, which covered 46 industry groups with 1,309 entrepreneurs in participation, the findings revealed that entrepreneurs had more concerns about specific factors.

Among top concerns included global economy (81.1%), loan interest rates (72.2%), and exchange rates (from the exporter's perspective, specifically the baht against the US dollar) at 45.2%. Meanwhile, factors of lesser concern include oil prices at 48.5%, the domestic economy at 43%, and the political situation in the country at 38.5%.

The index forecast for the next three months will stand at 96.2, down from 97.3 in November. Concerns about the minimum wage hike affecting operating costs, coupled with uncertainty regarding geopolitical conflicts, have led to higher commodity prices, including energy and raw material prices.

However, there are still positive factors supported by the Easy E-Receipt measure. This tax deduction initiative for 2024 aims to encourage domestic consumption during the period from 1 January to 15 February 2024.