KUALA LUMPUR, Sept 1 — Overall demand conditions remain subdued across the Malaysian manufacturing sector, with the latest data signalling further muted trends across the sector midway through the third quarter of the year, said S&P Global.
The research firm said the seasonally adjusted S&P Global Malaysia Manufacturing Purchasing Managers’ Index (PMI) was unchanged at 47.8 in August, indicating that business conditions remained challenging for manufacturing firms.
In a note today, it said the latest PMI reading suggests that gross domestic product (GDP) growth is running at a similar level to that seen in the second quarter of the year, as well as pointing to modest year-on-year improvements in official industrial production data.
S&P Global Market Intelligence economist Usamah Bhatti commented that although the latest PMI data suggest that demand conditions remained muted in the Malaysian manufacturing sector during August, the data are still consistent with modest growth in the official statistics.
“That said, evidence is pointing to demand conditions remaining subdued in the coming months, given the sustained moderations in production and new business inflows. Moreover, there was a steeper scaling back of employment levels as firms let go of excess capacity, partly due to efforts to cut costs.
“Input prices also rose at a quicker pace for the fifth month in a row and to the greatest extent since last November, which contributed to a fresh increase in output charges.
“That said, price increases remain well below the levels seen throughout the prior two years and less pronounced than the respective series averages.”
S&P Global said manufacturers often noted that demand in the sector remained muted during August, with reports of weak customer confidence and, as a result, total new business moderated for a twelfth consecutive month, although to a lesser extent than that seen in July.
“Demand conditions in international markets also eased, with new export orders falling for the fourth month in a row at a solid, albeit softer rate,” it said.
The research firm added that with customer demand remaining subdued, manufacturers scaled back production, which has been the case for the thirteenth month running, and the moderation was broadly unchanged from the previous survey period.
On another note, it said stocks of finished goods were wound down at the fastest pace since July 2021, as firms used existing stocks to fulfil orders.
In line with the trend for output and new orders, the research firm said that purchasing activity continued to be scaled back as the muted picture for new business deterred firms from buying additional inputs.
In turn, it noted stocks of purchases also decreased, and at the fastest pace for two years.
S&P Global said that there was also a further deterioration in vendor performance in the latest survey period, that although the extent of the lengthening in suppliers’ delivery times was only fractional, it was the most marked in nine months.
“Where delivery times increased, firms often mentioned raw material shortages. Hopes that new orders will return to growth supported confidence that production will rise over the coming 12 months.
“That said, the current subdued demand environment meant that the degree of optimism remained only modest and well below the long-run series average, it added.
— Bernama=
