Employment up, but Malaysia’s manufacturing falling at ‘solid rate’, report shows

KUALA LUMPUR, Jan 4 — Malaysia’s manufacturing operating conditions has continued to deteriorate at a “solid rate” despite showing a slight improvement from November, the latest Nikkei Malaysia Manufacturing Purchasing Managers Index (PMI) report showed.

The latest survey saw Malaysia recording an index of 48.0 last month, a slight improvement from the all-time low of 47.0 it recorded in November, but the production and new orders components of the index continued to decline for the ninth and tenth month consecutively.

“Operating conditions in the Malaysian manufacturing sector worsened at a solid rate in December, although one that was less pronounced than in November,” said Amy Brownbill, an economist at research firm Markit which compiles the survey, in a statement.

Malaysia’s PMI for the final quarter of 2015 averaged at 47.7, same as in the third quarter, making them both the joint lowest quarterly performance since the survey started in 2012.

One of the markers that showed improvement for December however was employment, which saw a slight increase, which according to the report, is in anticipation of a greater output in 2016.

“That said, the rate of job creation was only modest,” the report said.

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

The report pointed out that input prices, mainly prices of raw material goods, had increased at the fastest rate since November 2013, owing to the weak exchange rate and a higher sales tax.

“Meanwhile, inflationary pressures intensified as the weak exchange rate resulted in greater imported raw material costs. Survey respondents also mentioned the increase in sales tax pushing up input prices,” said Brownbill.

“Charges rose in December as manufacturers tried to pass the cost burdens to clients,” the report later added.

In 2015, the performance of Malaysia’s currency deteriorated rapidly to the US Dollar as global oil prices continued to plummet.

The government also brought into effect the Goods and Services Tax (GST) in an attempt to broaden the tax base.