Local manufacturing to see sustained growth

KUALA LUMPUR: Malaysia’s manufacturing sector is seeing sustained growth as slower production in February is seen to be in line with the month’s lower purchasing managers index (PMI) readings and electrical and electronics (E&E) export figures.

Kenanga Research said given that growth had managed to keep a positive trajectory despite the seasonal downtrend, it expected the manufacturing sector to have sustained growth last month.

“Further lending support to our view is the still high but moderating global semiconductor sales of 21 per cent in February, pointing to a sustainable E&E industry ahead.

“However, following reports of subdued external demand from the local PMI survey, we expect the local manufacturing sector to be susceptible to external slowdown.

“Overall, we maintain our view that for the first quarter of the year, economic growth will slow to 5.7 per cent from 5.9 per cent in the last quarter of last year,” the research firm said in a note yesterday.

Kenanga Research has also maintained its gross domestic product growth forecast for the year at 5.5 per cent and expected Bank Negara Malaysia to retain the Overnight Policy Rate at its current level to accommodate growth.

Meanwhile, Maybank Investment Bank Bhd said cautious short-term outlook on manufacturing pointed to subdued growth in the short term.

“Nikkei’s manufacturing PMI for Malaysia dropped to 49.5 against 49.9 in February due to the dip in output on lower new export orders,” it said in a report.