S&P Global: Latest PMI shows continued downtrend across Malaysian manufacturers

Malay Mail

KUALA LUMPUR, May 2 — New data from purchasing managers indicate a continuation of the decline across the local manufacturing sector since the start of the second quarter as demand remained subdued overall, S&P Global said in its latest Malaysian PMI report.

However, it noted that the rate of contraction was easing.

“Despite the latest PMI data suggesting that demand conditions in the Malaysian manufacturing sector remained muted at the start of the second quarter of 2024, the data appear to be on the up and are still consistent with modest growth in the official statistics,” said Usamah Bhatti, economist at S&P Global Market Intelligence.

“Evidence is currently pointing to demand conditions moving on an upward trajectory, given the softer moderations in production, new business and purchasing. Better still, manufacturers will be buoyed by the renewed expansion in new export sales, with the rate of growth the strongest recorded in three years.”

Employment levels in manufacturing stabilised in April, ending a three-month sequence of job shedding the agency said. Manufacturers said market conditions showed some signs of recovery to stabilise employment levels in April, following three consecutive monthly falls.

Meanwhile, input price inflation changed little on the month and contributed to a renewed increase in output prices, though the rate of charge inflation was marginal.

“Firms operating in the Malaysian manufacturing sector signalled a solid rate of input cost inflation at the start of the second quarter. Anecdotal evidence suggested that raw material prices had risen, notably due to exchange rate weakness,” the report said.

The seasonally adjusted S&P Global Malaysia Manufacturing Purchasing Managers’ Index rose to 49.0 in April, up from 48.4 in March to indicate a softer downturn in the Malaysian manufacturing sector.

An index score below 50 denotes contraction while a score above 50 signals expansion.

The latest PMI data suggest that GDP growth is running at a slightly improved rate than that seen at the end of 2023, while year-on-year improvements in official manufacturing production data would be modest.

“Manufacturers often noted that demand in the sector remained muted during April, with reports of weak customer confidence,” the PMI report said.

“Total new business moderated for the twentieth consecutive month, though the rate of reduction eased from March. Demand conditions in international markets meanwhile improved for the first time in a year and at the strongest rate since April 2021.”

Manufacturers expressed hope that new orders will return to growth territory and supported confidence that production will rise over the coming 12 months.

Still, the current muted demand environment meant that the degree of optimism eased from March to reach an eight-month low, the report said.