KUALA LUMPUR, Oct 1 — Data from Nikkei’s September Purchasing Manufacturer’s Index (PMI) showed the strongest improvement in Malaysia’s manufacturing conditions for 10 months, driven by a faster rate of job creation.
The Nikkei Malaysia Manufacturing PMI is based on data compiled from the monthly responses to questionnaires sent to purchasing executives in over 450 industrial companies by Japanese financial media giant Nikkei, and compiled by information, analytics and solutions provider IHS Markit.
In a statement today, IHS Markit said the survey showed that the improvements were led by the second sharpest gain in employment in the survey’s history, since opening month of the survey in July 2012.
It said the volume of new work received by Malaysian manufacturers rose for the second month running in September, despite the introduction of the new SST at the start of the month, as new export orders increased for the third month running, albeit at a weak rate.
“In fact, it was the first back-to-back rise in new business in the goods producing sector for nearly four years,” IHS Markit said.
Economics Director Paul Smith said Malaysia’s manufacturing economy defied the challenges of the recently introduced Sales and Services Tax (SST) to register the strongest Manufacturing PMI growth in ten months in September.
“Output and new orders rose since the previous month despite rates of growth remaining relatively tepid, with confidence about the future dipping to a three-month low amid worries amongst firms on how the introduction of the SST would affect demand and subsequently production going forward.
“Indeed, the impact of the SST is already being felt on the pricing side, with input cost inflation jumping up to a six-month high in September and output charges being raised for a third successive month,” he said..
Data showed that the upward movement in headline PMI was driven by a stronger rise in employment as firms reported taking on more staff in preparation for expected workloads.
IHS Markit said purchasing activity and input stocks both increased for the second month running in September, as manufacturers supported current workloads and planned for expected customer orders.
“Suppliers’ delivery times lengthened to the greatest degree in three months,” it said.
Meanwhile, input price inflation jumped to a six-month high in September with firms mainly linking greater cost pressures to the introduction of the new Sales and Service Tax on Sept 1.
“The month-on-month acceleration in the rate of inflation is the largest observed in over a year-and-a-half. Subsequently, manufacturers raised their own prices for the third month running, and at a stronger rate than in July and August,” IHS Markit said.
It said output expectations, however, remained positive during September with manufacturers generally expecting more business from customers over the next 12 months.
“The strength of sentiment weakened, reflecting concerns among some firms that the implementation of the new SST will lead to slower orders,” IHS Markit added. — Bernama
