KUALA LUMPUR, July 2 — Deteriorating business conditions for local manufacturers improved marginally in June to reach a three-month peak, according to Nikkei Malaysia.

In its monthly Purchasing Managers Index (PMI), Malaysia rose to 49.5 from 47.6 in May.

A PMI score of below 50 denotes contraction while a score of above 50 signals expansion.

"June data indicated that manufacturing conditions in Malaysia deteriorated at the slowest pace since March, as the rates of contraction in output and new business eased to the slowest since March.

"Anecdotal evidence highlighted weak underlying demand for Malaysian goods from both domestic and international markets. Surprisingly, firms raised their staffing levels during June, despite a sustained period of decline in output and new orders,” said Aashna Dodhia, an economist at IHS Markit that compiled the data.

Nikkei added it received information that the government’s zero-rating of the Goods and Services Tax has alleviated cost pressure on manufacturers, leading input inflation inflation to ease to its lowest since March 2015.

Local firms also reported positive order outlooks for the next 12 months, although business confidence was now at its lowest since last October.