Thailand's manufacturing production index (MPI) fell by 3.14% year-on-year to 94.8 points in May because of an export slowdown, although the reading improved from April thanks to the tourism recovery, says the Office of Industrial Economics (OIE).
May's MPI increased by 14.2% from 83.0 points in April.
"The manufacturing sector benefited from more goods purchase orders in the domestic market to serve growing demand from tourists," said Warawan Chitaroon, director-general of the OIE.
Capacity utilisation in May increased to 60.2%, up from 53.8% in April when factories shut down during the long holidays to celebrate the Songkran festival.
Mrs Warawan said tourism plays a key role in driving production and sales in various segments, including beverages and alcoholic drinks, sugar, palm oil and motorcycles.
According to the OIE, motorcycle manufacturing increased by 22.1% year-on-year thanks to demand from the tourism industry and more purchase orders overseas.
Car production also increased by 17.5% year-on-year, especially driven by exports of pickups and small and mid-sized passenger cars.
Other sectors that contributed to the increase in the May MPI included air conditioners, with manufacturing up 12.6% year-on-year thanks to more purchases of the appliances in Thailand and overseas during the hot season.
Plastic and synthetic rubber production also increased by 2.98% year-on-year as polyethylene, ethylene and polypropylene resin producers expanded their production capacity, following factory maintenance.
For the first five months of the year, the MPI decreased by 4.49% year-on-year to 96.4 points.
The office believes the tourism industry continued to drive domestic economic growth in June.
Thailand should also benefit from external factors, such as the Chinese and Japanese economies possibly improving in July, said the OIE.
Officials will keep a watch on the export situation and political uncertainties in Thailand, she said.
"Exports are still a concern as the value has decreased for eight consecutive months, while it remains unclear whether a new government led by the Move Forward Party will form smoothly," said Mrs Warawan.
"The unclear political direction will affect investor confidence."
