KUALA LUMPUR, March 1 — Local factory production in February recorded the first growth since March 2015, in the most concrete indication that the sector’s long-running decline may finally be bottoming out.
The sector scored a 49.4 in Nikkei Malaysia’s Purchasing Managers Index (PMI) for February, up from 48.6 the month before and the closest it has been to a 50 since May 2015.
The score of 50 represents parity in the sector, and any number greater than that in the index represents an improvement, while those under the threshold indicate the opposite.
Nikkei cautioned, however, that the sector would continue to face challenges despite the recent resurgence, noting that the weakness of the local currency would maintain pressure on purchasing costs and delivery charges for manufacturers.
“Manufacturers raised production for the first time in 23 months, as levels of outstanding business accumulated at the quickest pace in the series history,” it said in a statement accompanying the results.
“However, goods producers had to contend with another decline in new business levels, contributing to job shedding for the first time in six months.”
Other signs that manufacturers should remain cautious was the continued decline of fresh orders, which has now fallen for two straight years.
The unemployment rate rose to 3.5 per cent in December, according to the Statistics Department, up 0.1 percentage points from the same period in 2015. Inflation also climbed faster than projected last month.
The positive news about local manufacturing comes at a time when Malaysia is recording billions in new foreign investments for a variety of commercial and infrastructure undertakings such as the Petronas RAPID project in Pengerang, Johor.
Malaysian and Saudi Arabian firms also signed deals for billions of dollars this month, adding to similar agreements with Chinese firms late last year.
“Malaysia’s manufacturers remained confident towards their 12-month outlook on output growth in February. In fact, the level of positive sentiment rose to a 31-month high, despite being only moderate overall,” Nikkei Malaysia concluded.
