KUALA LUMPUR, June 2 — Malaysia’s manufacturing Purchasing Managers’ Index (PMI) is expected to remain consistent with the trend of the global PMI, given the multifaceted and volatile nature of the manufacturing industry, said PublicInvest Research.
In its Economic Update note, it noted that its apprehension is founded on a confluence of factors that predispose the industry to significant downside risks.
These factors include inflationary pressures, which are currently at elevated levels, the impact of ongoing interest rates, and persisting geopolitical conflicts.
“Therefore, we project that Malaysia’s PMI will continue to languish below the 50-point mark, extending into at least the third quarter of 2023.
“However, our projection suggests that the manufacturing industry as a whole will still experience a commendable 4.4 per cent expansion in 2023,” it said.
Meanwhile, MIDF Research anticipated Malaysia’s external trade performances in the second quarter of 2023 will continue to contract, as reflected in the S&P PMI readings.
In its research note, it said the poor business sentiment would add more downward pressure on the ringgit, on top of the US debt ceiling talk and possible extension of a rate hike by the US Federal Reserve (Fed).
“However, we foresee the current depreciation of the ringgit is only temporary and the currency shall regain its footing once the fiscal and monetary matters in the US settle down.
“The rebound of manufacturing PMI figures of Japan and China as well as continued optimism of the Indian economy may boost regional trade demand in Asia which will benefit Asean and Malaysia,” MIDF Research said.
Factory PMI readings in Japan and China rebounded to expansion path at 50.6 and 50.9 in May 2023 respectively.
Later in the second half of 2023, the research firm expects Malaysia’s external trade performances to record a smaller contraction while the ringgit is expected to return to an appreciation path.
While domestic demand in Malaysia is predicted to remain resilient amid softer inflationary pressure, improving labour market, the revival of tourism activities and supportive economic policies.
On Thursday (June 1), S&P Global Market Intelligence said the seasonally adjusted S&P Global Malaysia PMI posted 47.8 in May, down from 48.8 in April.
However, the delivery times from suppliers improved and were shortened. The sentiment was highlighted as the lowest since June 2022.
Among regional countries, contraction patterns of manufacturing PMI figures were observed in Taiwan (44.3), Vietnam (45.3) and South Korea (48.5).
— Bernama
