Thailand's Manufacturing Production Index (MPI) dipped for a 17th consecutive month in February, falling by 2.8% year-on-year to 99.2 points, as a result of lower manufacturing in key areas like the automotive industry, says the Office of Industrial Economics (OIE).
Thailand continues to struggle with high household debt and weak purchasing power, the office said.
"A drop in car manufacturing severely affected the MPI. Domestic sales of pickups turned sluggish in the domestic market, following banks' stricter criteria to grant car loans," said Warawan Chitaroon, director-general of the OIE.
Bankers remain cautious about lending money to car buyers for fear of non-performing loans.
She said total car production in the country had decreased for seven consecutive months, and by 19.2% year-on-year in February. Manufacturing for domestic sales fell by 26.3% year-on-year to 46,928 units, while production for export declined 9.2% year-on-year to 86,762 units.
The decrease in the February MPI was also attributed to a drop in electronic parts and circuit board production by 18.6% year-on-year because of lower demand from the global market.
Palm oil production also fell by 27.2% year-on-year due to a drought that hit palm harvests.
Taking a look at overall industries, the OIE said that Thailand's capacity utilisation was 59.7% in February.
Industries that increased their MPI in February included oil production, which rose by 7.5% year-on-year, driven by bustling tourism that boosted demand for oil.
Chemical fertiliser and nitrogen compound manufacturing rose by 39.8% year-on-year, thanks to sellers' marketing campaigns and higher prices of many farm products that increased farmers' purchasing power.
Jewellery and gemstone manufacturing also increased by 24.5% year-on-year due to more purchase orders from overseas markets.
Despite the indicator's decline in February, the OIE remains positive about the MPI for the whole year, which is expected to grow by 2-3% due to the expansion of tourism and exports.
Authorities believe the Thai economy will improve in the second quarter because of the allocation of the state budget, which has faced long delays due to the lengthy post-election process of forming a coalition government last year.