Despite another monthly dip, Malaysian factories start to see light at the end

Malaysian manufacturers are increasingly positive about the year’s outlook, with some anticipating the highest production growth to come later in 2019. — Picture by KE Ooi
Malaysian manufacturers are increasingly positive about the year’s outlook, with some anticipating the highest production growth to come later in 2019. — Picture by KE Ooi

KUALA LUMPUR, April 1 — Manufacturers in the country reported the highest level of optimism of the year so far notwithstanding their continued decline in Nikkei’s monthly index.

According to Nikkei Malaysia’s Purchasing Manager Index (PMI) for March, Malaysia registered a score of 47.2 that was down marginally from 47.6 in February.

A PMI score under 50 denotes contraction while a score above 50 signals expansion.

However, Nikkei pointed out that the March performance suggested the sector was on track for a full-year growth of around 4 per cent, based on past data.

“Malaysia’s manufacturing companies reported increasing headwinds on current business activity in March, though also reported a brightening outlook which adds to hopes that the recent slowdown will start to ease in coming months.

“While several key survey gauges fell in March, it’s important to bear in mind that, when compared against official measures, the survey is still broadly indicative of the economy growing at an annual rate of 4–4.5 per cent,” Chris Williamson, Chief Business Economist at IHS Markit that compiles the survey, said.

Firms were also increasingly positive about the year’s outlook, with some anticipating that the highest growth in production was still to come for 2019.

Elsewhere in the region, countries included in the PMI survey all outperformed Malaysia, with Myanmar’s manufacturing sector reporting the strongest result with an index score of 52.4.

Next among those enjoying growth in March was Vietnam (51.9), followed by the Philippines (51.5), Indonesia (51.2), and Thailand (50.3).

Singapore’s 47.9 helped it to leapfrog Malaysia and consign its larger neighbour to the bottom of the ladder.

Outlook in the region was mostly positive save for Singapore and the Philippines that both reported gloomy forecasts, with Filipino manufacturers’ confidence at the lowest in the PMI’s history.

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