The ASEAN manufacturing sector commenced 2026 with intensified momentum, as the S&P Global ASEAN Manufacturing PMI edged up to 52.8 in January. For the textile and apparel segments, this sustained expansion - now in its seventh consecutive month - has translated into the joint-fastest production growth in nearly three years. Higher output requirements have compelled firms to increase purchasing activity at the sharpest rate since April 2023. However, this recovery is being tested by severe inflationary headwinds; input cost inflation recently hit a 14-month high, driven by a recovery in steel demand and localized upticks in cotton indices. While global cotton prices have trended downward, the Chinese Cotton Index stood at 103.6 cents/lb in mid-January, pressuring regional margins.
Strategic migration towards integrated value chains
Vietnam is currently spearheading this regional upturn, targeting a record $48 billion in textile exports for 2026. Data indicates, global brands are moving beyond simple ‘Cut-Make-Trim’ models, opting instead for integrated Free on Board (FOB) and Delivered Duty Paid (DDP) partnerships with ASEAN suppliers to mitigate logistics volatility. Despite a modest cooling in new order growth to a four-month low, business confidence reached a 33-month peak. Manufacturers are increasingly utilizing the Regional Comprehensive Economic Partnership (RCEP) to pivot toward intra-regional trade, effectively insulating the sector from unpredictable Western tariff shifts. With capacity pressures leading to a backlog of work, industry analysts anticipate a necessary acceleration in employment growth to maintain this 2026 production trajectory.
ASEAN manufacturing infrastructure
The ASEAN manufacturing block is a dominant global hub for apparel, electronics, and technical textiles. Led by high-growth markets like Vietnam and Indonesia, the sector is currently transitioning toward high-value, sustainable production models. The region aims for 4 per cent GDP growth in 2026, supported by robust foreign direct investment and aggressive digital integration.
