KUALA LUMPUR, Feb 1 — Malaysia’s manufacturing conditions continued its decline in the new year but at a weaker pace, said the latest Nikkei Malaysia Manufacturing Purchasing Managers Index (PMI) report released today.

The headline index improved to 48.6 at January compared to 48.0 the month before, but is still below the 50.0 point which indicates a general deterioration, and is still below the average index of 49.8.

“January PMI data showed signs of worsening operating conditions in the Malaysian manufacturing sector. However, the rate of deterioration was weakest since May last year,” said Amy Brownbill, an economist at research firm Markit which compiles the survey, in a statement.

“This was reflected in softer contractions in output and new orders. Meanwhile, new orders from abroad decreased for the first time in a year, although at only a slight rate.”

“Cost pressures continued to build, as an increase in sales tax and unfavourable exchange rates led to a further sharp rise in input prices. Consequently, manufacturing charges rose, suggesting the sector will contribute to overall inflationary pressures,” Brownbill added.

The fall of new export orders resulted in a decrease in international demand, and subsequently a fall in total new work intakes.

Most firms explained that the fall was resulted by poor market conditions, although the rate was only marginal.

Global economy is reeling from the shock of uncertain and falling oil prices in reaction to Saudi Arabia-Iran tensions, in addition to slowdown in China.

Meanwhile production by Malaysian manufacturers fell for the tenth consecutive month due to lack of sales, while total new orders fell for the eleventh month running, although at the weakest rate since September 2015.

Despite that, employment has increased for the second month running, resulting in the sharpest job creation rate since October last year.

“Despite worsening operating conditions, goods producers in Malaysia hired additional workers for the second month running in January,” said the report.

The PMI consists of indicators measuring new orders, output, employment, suppliers’ delivery times and stocks of purchases.