Thai industries sentiment index drops to 88.5 as layoffs rise

Thai Industries Sentiment Index (TISI) experienced another decline in May, dropping to 88.5 from April’s 90.3 points, as 15,000 workers have been laid off since the beginning of the year, according to the Federation of Thai Industries (FTI).

Layoffs in the first five months of 2024 emerged as the TISI, which measures the manufacturing sector’s health, fell for the second consecutive month. In April, the index was at 90.3 points, a decrease from 92.4 points in March, said FTI Vice Chairman Nava Chantanasurakon.

“The index decreased because of a raft of factors that resulted in lower purchase orders, production, and sales.”

Manufacturers are facing difficult circumstances due to weak consumer spending amid high household debt, which has led banks to tighten lending criteria. This situation has significantly affected businesses, particularly in car manufacturing.

Entrepreneurs are also grappling with higher energy costs and increased freight rates, resulting from a shortage of freighters and shipping containers. Shipping is taking longer due to Middle East tensions, specifically attacks on vessels by Houthi rebels in the Red Sea.

The May TISI results are based on a survey of 1,329 entrepreneurs across 46 industries under the FTI. Higher oil prices were identified as the leading concern, highlighted by 61.3% of respondents, followed by Thailand’s sluggish economy (59.9%) and domestic political uncertainties (43.1%).

Uncertainty looms over Prime Minister Srettha Thavisin’s position, with the Constitutional Court set to hear his case on July 10. The case involves a Cabinet appointment made by the premier, which allegedly infringed the constitution, according to media reports.

ML Peekthong Thongyai, vice chairman of the FTI, urged the government to expedite efforts to regulate oil and gas prices, resolve shipping issues, and assist small and medium-sized enterprises (SMEs) with their liquidity problems, reported Bangkok Post.

SMEs are still struggling to access finance, and without intervention, some may be forced to shut down. The FTI has previously indicated that factory shutdowns are expected to rise, with 1,600 to 1,700 businesses already closing earlier this year due to the economic slowdown, merger plans, or rising operating costs.