KUALA LUMPUR, July 1 — Malaysia’s manufacturing sector fell to its lowest in two years last month and prompting layoffs from companies, based on revelations by the Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) released today.
According to the survey, factory output in Malaysia shrunk last month for the third consecutive month, with respondents blaming poor market conditions and subdued demand for the latest fall.
“At 47.6 in June, down from 49.5 in May, the headline PMI signalled a further deterioration in operating conditions at Malaysian goods producers,” said a statement accompanying the report.
“Furthermore, the latest reading was the weakest since October 2012. The fall in the PMI was reflected in all five components.”
The PMI is a composite index that gauges manufacturing performance by measuring new orders, output, employment, suppliers’ delivery times and stocks of purchases; a number higher than 50 shows overall improvement of operating conditions in the sector.
The report said that employment levels fell for the first time this year, as lower budgets caused companies to shed staff at the quickest rate since July 2014.
The PMI also signalled a marked decline in new orders reaching companies, caused by falling sales from domestic client.
This comes as purchasing costs continue to rise, including higher raw material cost and increasing tax, leading companies to pass the burden on to clients.
The PMI is based on data compiled from surveying purchasing executives in 550 manufacturing companies in eight categories: basic metals, chemicals and plastics, electrical and optical, food and drink, mechanical engineering, textiles and clothing, timber and paper, and transport.
According to the Department of Statistics, the latest Malaysia’s industrial production index (IPI) in April showed an increased by 4 per cent to 117.9 compared to the same period last year, but was below economists’ expectations of a 4.5 per cent.
