Nikkei Malaysia manufacturing PMI falls to 48.6 pct in October
KUALA LUMPUR: The headline Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) fell to 48.6 in October from 49.9 in September, consistent with a modest deterioration in the health of Malaysia’s manufacturing sector.
In a note IHS Markit, a financial information services provider, said the Malaysian manufacturing sector started the fourth quarter on a subdued note with overall business conditions having deteriorated at the sharpest rate since July, following a broad stagnation in the prior month.
IHS Markit economist, Aashna Dodhia, said the sector entered bumpy terrain in October.
“The downturn was mainly driven by falling domestic and overseas demand for Malaysian goods with new orders and new export orders declining at the fastest rates since July 2017 and December 2016 respectively.
“In response to weakening business conditions, the manufacturing sector saw decreased payroll numbers for the first time in four months, and at the greatest extent since August 2016,” she added.
She said at the same time, business confidence towards the 12-month outlook for output eased to the weakest since May, although, there was a silver lining for manufacturing firms as inflationary pressure eased from the prior month.
The IHH Markit survey said the manufacturing sector recorded a rise in output during October, but the rate of growth was only fractional.
The report said reflecting weak underlying demand conditions, manufacturers reduced their input buying again in October and at the same time, companies were discouraged from adding to their pre-production inventories at a solid pace.
Firms continued to face higher input costs with the rate of inflation remaining sharp overall, but eased from the prior month.
There were reports that currency weakness relative to the US dollar contributed to a general rise in market prices for raw materials.
However, firms were restricted in their ability to pass on higher cost burdens to price-sensitive customers as firms raised their average selling costs, albeit at a marginal pace.
According to the report, delivery times improved for the second consecutive month, but at a fractional pace as faster times were associated with weak capacity pressures at vendors.
Meanwhile, manufacturers retained positive expectations for output in October, although confidence was the weakest since May.