Malaysia’s manufacturing revival hit roadblock in January as MCO renewed, survey finds

Worryingly for the manufacturing sector, the bulk of new cases recently have come from Selangor — the centre of Malaysian industry — which reported 2,460 more infections yesterday alone. — Picture by Miera Zulyana
Worryingly for the manufacturing sector, the bulk of new cases recently have come from Selangor — the centre of Malaysian industry — which reported 2,460 more infections yesterday alone. — Picture by Miera Zulyana

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KUALA LUMPUR, Feb 1 — The country’s manufacturing sector receded last month when the movement control order was reintroduced and pushed business confidence to the lowest level since August of 2020, according to a new IHS Markit poll.

In the IHS Markit Malaysia Manufacturing Purchasing Managers’ Index (PMI) for January, Malaysia registered a score of 48.9 versus 49.1 in the preceding month; a score below 50 denotes contraction while a score above 50 signals expansion.

“Renewed efforts to contain the Covid-19 pandemic both at home and around the world have not surprisingly taken a further toll on the manufacturing sector,” Chris Williamson, chief business economist at IHS Markit, said regarding Malaysia’s latest result.

“Not only is demand coming under further pressure, notably in consumer-facing markets, but supply chains are being disrupted by the restrictions caused by the pandemic.”

The government both renewed the MCO and imposed a state of emergency in the country last month, ostensibly to bolster its efforts to contain the Covid-19 pandemic locally.

Since then, however, Malaysia’s Covid-19 situation has continued deteriorating, resulting in three straight days with over 5,000 new cases or more than twice what was reported when the MCO was announced on January 11.

Worryingly for the manufacturing sector, the bulk of new cases recently have come from Selangor — the centre of Malaysian industry — which reported 2,460 more infections yesterday alone.

“Hopes of a swift recovery also took a step back in January, linked in part to concerns over new variants of the coronavirus, pushing business optimism back to its lowest since last August,” Williamson said.

According to IHS Markit, Malaysian producers reported lower orders and output in January, citing the renewed restrictions as well as depressed demand and confidence due to the pandemic.

The research firm said companies overall still held an optimistic outlook based on expectations about the deployment of Covid-19 vaccines here and across the rest of the world, with more firms reporting optimism than pessimism.

However, it qualified this by noting that business optimism has fallen to the lowest level in five months due to the worsening of the pandemic here and concern that new Covid-19 variants could mute the recovery expected from the rollout of vaccines.

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