Political uncertainty, rising costs trigger another drop in Industrial Confidence Index

It was the second consecutive monthly decline, Kriengkrai said, adding that concerns over manufacturing output and political uncertainty were the factors leading to both declines.

He said every component of the index – the composite purchasing managers' index, total sales, production volume, production costs, and business performance – declined.

Lower confidence among business operators follows shrinking exports due to uncertain global economic conditions, reduced demand in key markets, and volatile exchange rates, Kriengkrai said.

Business operators continue to face higher production costs, particularly energy prices, and rising interest rates, which are causing financial costs to rise.

Household debt is also making consumer spending more cautious, while post-election political uncertainty is raising concerns about a possible delay in the formation of a new government, Kriengkrai said.

He said, however, that there are bright spots like the expansion of the tourism sector, rising demand for industrial products, and an economic recovery in China, which will have a positive impact on exports.

The index is expected to average 104.3 over the next three months, compared to 105.0 in April, Kriengkrai said.

Entrepreneurs are concerned about minimum wages rising because it will raise production costs, especially for small and medium-sized enterprises, and lead to a decline in foreign investment, he said.

Moreover, erratic weather patterns and drought are impacting the supply of raw materials to Thai agro businesses, while a global economic slowdown and volatility in global financial markets remain risk factors for the Thai economy, Kriengkrai added.