Malaysian manufacturing sector continues to recover

KUALA LUMPUR: The recovery in the Malaysian manufacturing sector continued in July and firms expect market demand to strengthen over the coming year, supporting overall confidence in the 12-month outlook for production.

In a note, IHS Markit said that after rising at a joint record pace in June, output continued to expand in the latest survey period, with trends in new orders much improved since the nadir of the Covid-19 downturn in April.

“That said, the ongoing effects of the pandemic meant that firms continued to operate below capacity and therefore expressed further caution around hiring, particularly in the face of rising input costs.

“The headline IHS Markit Malaysia Manufacturing Purchasing Managers’ Index (PMI) – a composite single-figure indicator of manufacturing performance – posted 50.0 in July, down marginally from 51.0 in June but still well above the readings seen during the worst of the Covid-19 downturn and above the survey’s long-run average of 49.0,” it said. IHS Markit said manufacturing production rose for the second month running in July, with respondents linking higher output to signs of an improving trend in new orders following an easing of the movement control order.

However, some respondents indicated that demand remained fragile as the pandemic continued to impact the sector, and this was particularly the case with regards to new export orders, which softened to a greater extent than in June.