Malaysia’s PMI at 16month high in January, overall optimism picked up — S&P Global

The overall optimism of Malaysian manufacturers picked up slightly in January 2024 from that seen last December amid signs of demand improvement, S&P Global said yesterday.

The seasonally adjusted S&P Global Malaysia Manufacturing Purchasing Managers’ Index (PMI) posted 49.0 in January, up from 47.9 in December and the highest since September 2022.

Accordingly, the latest reading suggests that the downturn of last year is losing momentum and sets the Malaysian manufacturing sector on course for a gradual recovery.

The report said output and new orders moderated only modestly, while firms also saw softening reductions in new export orders and backlogs.

As demand showed signs of improvement, manufacturers scaled back input buying and stocks of purchases to a lesser extent, while delivery times improved for the first time in seven months, said S&P Global.

“The latest data for the Malaysian manufacturing sector signalled that the worst of the slowdown seen in 2023 has passed, with the January data pointing to an easing in the rate of moderation in operating conditions,” said S&P Global Market Intelligence economist, Usamah Bhatti.

Output, new orders and exports were all scaled back to lesser extents at the start of 2024, representative of a slight pick up in the rate of GDP growth, he said in a statement.

“Amid the softer reduction in new orders, firms also indicated the slowest depletion in backlogs since August 2022, suggesting that capacity pressures are starting to build on manufacturing firms.

“The firms also reported a further softening in price pressures in January, as input prices rose at the slowest rate for eight months. This contributed to the softest rise in output charges since August 2023.”

On the price front, average cost burdens saw a sustained, yet softer increase that was the slowest since last May. This contributed to the softest rise in output charges since August last year, S&P Global said.

Looking at the historical relationship between the PMI and official Gross Domestic Product (GDP) statistics, the figures suggest that year-onyear GDP growth picked up from the end of 2023, while the data are also consistent with a marginal improvement in official manufacturing production on an annual basis.

Manufacturing new orders moderated for the 17th month running in January, through the latest slowdown was the weakest recorded since October 2022.

Firms often reported that the muted demand environment weighed on sales though some companies noted a slight improvement at the start of 2024.

“This trend was extended to international demand, as new export orders reduced at the softest pace in the current ninemonth sequence,” it said.

Subdued demand was also a key factor behind a further slowdown in production, which eased for the 18th month running but to the softest extent since April 2023.

Employment moderated for the eighth time in the past nine months in January, however, the rate of job shedding was only fractional.

There were some reports of the non-replacement of voluntary leavers, though other firms mentioned that some vacancies were filled. Spare capacity was evident, with backlogs of work reducing for the 20th month running, but at the softest rate since August 2022, it added. — Bernama