International Business & Economy Malaysia manufacturing sees declines in new orders

Malaysia manufacturing sees declines in new orders




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Despite a rebirth of manufacturing output growth for the past 23 months, Malaysia saw declines in new orders and in hiring which weighed on the overall performance of goods producers.

Commenting on the Malaysian Manufacturing PMI survey data, Samuel Agass, Economist at IHS Markit, which compiles the survey, said the first increase in Malaysian manufacturing could not prevent a further deterioration in the health of the sector.

“However, the downturn is easing and with backlogs of work accumulating at the quickest pace in the survey’s history, firms look set to sustain the uptick in output over the coming few months.

“One concerning aspect extracted from February’s survey data is the record increases in both output prices and input costs, brought about by a further depreciation of the exchange rate. Firms will hope this doesn’t hinder any possibility of new order growth in the near future.”

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The health of Malaysia’s manufacturing sector deteriorated at a weaker pace in February.

Manufacturers raised production for the first time in 23 months, as levels of outstanding business accumulated at the quickest pace in the series history.

However, goods producers had to contend with another decline in new business levels, contributing to job shedding for the first time in six months.

Meanwhile, unfavourable exchange rate movements were reflected in input costs and output charges increasing at survey record rates.

The headline Nikkei Malaysia Manufacturing Purchasing Managers’ IndexTM (PMI)TM – a composite single-figure indicator of manufacturing performance – rose from January’s 48.6 to record 49.4 in February.

Moreover, the latest figure was the highest recorded since May 2015 and pointed to a weaker downturn in Malaysia’s goods producing sector.

New business received by Malaysia’s manufacturing firms contracted further during February, lengthening the current sequence of decline to two years.

There was some evidence provided by panel members linking the fall in new work to sluggish market conditions.

Meanwhile, volumes of new export orders remained unchanged since January.

Despite new orders contracting, goods producers raised their output levels for the first time since March 2015.

That said, the rate of expansion was only moderate. The rise was reflected in the sharpest accumulation of finished goods stock for 15 months.

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