Rise in new orders lifts local production to 50.7
KUALA LUMPUR: The local production output rose for the first time in over two years on strong export orders.
The headline Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) improved to 50.7 last month from 40.9 in March, supported by marginal rise in new orders, said IHS Markit, which compiled the survey.
Companies were buoyed by the stronger numbers, giving a boost to the growth confidence for the next 12 months.
The April survey showed that new export orders rose at a solid pace and were the strongest since July 2014.
Growth was underpinned by a solid gain in new export orders, as foreign demand for Malaysian goods strengthened and helped to offset ongoing weakness from domestic-based clients.
China, Europe, Japan and the Middle East were all notable sources of new sales success.
“With output rising at a slightly faster rate than new business over the month, manufacturers were able to make inroads into their backlogs of work outstanding,” it said in the report.
It added that last month’s survey marked the first time that backlogs had fallen this year, with the decline the greatest recorded for a year.
Meanwhile, there were reports that adverse currency movements had raised the prices of raw materials.
Average input prices rose sharply last month, with the rate of inflation remaining historically high.
The IHS Markit report said where possible, local manufacturers sought to pass on the rising costs to clients through a rise in average output charges.
Paul Smith, senior economist at IHS Markit, said: “April’s survey marked a somewhat positive turnaround for the manufacturing sector, with output and new orders rising concurrently for the first time in over two years.
“With export growth also possibly supported by relative currency weakness, the corollary was a further sharp rise in input costs, with firms seeking to pass these on wherever possible to clients.” Rupa Damodaran