The S&P Global Asean Manufacturing Purchasing Managers’ Index (PMI) fell to a four-month low of 51.1 in August from 51.6 in July.

However, S&P Global said Asean manufacturing companies remain confident about output growth in the coming year.

“Expectations were the highest since February. That said, the index has now printed below the long-run average for 22 consecutive months,” said S&P Global.

S&P Global Market Intelligence economist Maryam Baluch said the Asean manufacturing sector benefitted from strengthening underlying demand trends, as new orders rose solidly, thus encouraging firms to raise their output in August.

“That said, the latest data revealed a slight cooling on the month, as deteriorating foreign demand continued to act as a headwind to growth,” she said in a statement.

However, the employment picture looked murky.

Baluch said despite rising pressures on capacity, firms recorded a fresh decline in payroll numbers, albeit only fractionally.

Instead, companies opted to further deplete their inventories to meet business requirements.

S&P Global said August data showed strengthening underlying demand trends, as expansions in new factory orders and output were solid overall.

However, there were signs of cooling growth as the respective seasonally adjusted indexes measured an eight- and a four-month low, respectively, it noted.

Furthermore, it said demand was largely bolstered by domestic markets, as sales to foreign clients continued to fall in August.

“Growth in overall new orders supported firms’ decisions to further raise their buying activity in August, with the rate of growth quickening slightly from July’s three-month low.

“That said, manufacturers made further inroads in their holdings, as both pre- and post-production inventories were depleted at stronger rates,” said S&P Global.