The Sun (Malaysia)
Manufacturing conditions worsen
PETALING JAYA: The Malaysian manufacturing sector contracted in October, with the headline Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) coming in at 48.1, down slightly from 48.3 in September, indicating a further worsening in conditions.
A PMI reading above 50 indicates an expansion in manufacturing activity, while a reading below points to a contraction. This was the seventh straight month of contraction for the sector.
Markit economist Amy Brownbill said manufacturing conditions in Malaysia worsened at the start of the final quarter of 2015.
“Production contracted for the seventh straight month, underpinned by the sharpest decrease in new orders in over three years. Subsequently, buying activity reduced as manufacturers drew on existing inventories instead of purchasing new items,” she said in a statement yesterday.
Meanwhile, inflationary pressures intensified, with input prices rising at the second-strongest rate in the survey history. Concurrently, manufacturing charges increased at the joint-fastest rate in the series to date.
“On a positive note, both employment and new export orders expanded in October, with the latter increasing at the sharpest rate since July 2014.”
Data suggested that the decline in total new work intakes was mainly attributed to the domestic market, as international demand rose.
New export orders at Malaysian goods producers rose for the second month running in October. Furthermore, the rate of expansion was the most marked since July 2014.
According to a number of panellists, manufacturers benefited from the currency exchange rate, which helped to improve price competitiveness.
On the price front, reports of an unfavourable exchange rate pushed up costs of imported raw materials and an increase in sales tax led to a sharp rise in input prices. Subsequently, prices charged increased at the joint-fastest rate in the history of the series.