KUALA LUMPUR, Aug 3 — The July PMI of 47.7 from the Markit's Nikkei Malaysia Purchasing Managers' Index signalled a further deterioration in operating conditions at Malaysian manufacturers, although the PMI was little changed from June.
The contraction resulted from a further sharp fall in production in July, and a decline in new orders due to weaker demand and challenging economic conditions. The drop was due to soft domestic demand, as new export orders expanded for the sixth straight month.
Although the employment rate remains modest, companies cut back on staffing levels at the fastest pace since July 2014.
Buying activity contracted at the third-fastest rate in the series history while inventories of pre-production items were depleted at the quickest rate.
Purchasing costs rose, as unfavourable exchange rates pushed up raw material costs and because of the imposition of a consumption tax.
Commenting on the Malaysia PMI survey, Amy Brownbill, economist at Markit, said:
“The latest survey data indicated worsening operating conditions at Malaysian manufacturers. Production declined further, alongside a marked contraction in new orders. Concurrently, employment levels declined at the quickest rate since July last year.
“Meanwhile, buying activity contracted for the second straight month, leading to a fall in stocks of purchases. Moreover, the rate of depletion in pre-production goods was the fastest in the survey history.
“In contrast, new export orders rose for the sixth month in a row. Reports of securing new international clients and the launching of new projects were cited as the main factors behind the latest expansion. However, the rate of increase was only marginal.” — Reuters
