Malaysia business confidence soars despite second monthly fall in factory output

The optimism defied Malaysia’s second monthly fall in Nikkei’s Purchasing Managers Index to 47.8 last month, down from 48.8 in May. — Picture by Ahmad Zamzahuri
The optimism defied Malaysia’s second monthly fall in Nikkei’s Purchasing Managers Index to 47.8 last month, down from 48.8 in May. — Picture by Ahmad Zamzahuri

KUALA LUMPUR, July 1 — Malaysian firms’ outlook brightened further in June to reach the highest levels since October 2013, according to Nikkei’s monthly poll of manufacturing companies in the country.

The optimism defied Malaysia’s second monthly fall in Nikkei’s Purchasing Managers Index (PMI) to 47.8 last month, down from 48.8 in May.

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

Chris Williamson, chief business economist at IHS Markit that compiled the data, said the decline in the PMI indicated continuing headwinds for manufacturing as a result of slowing global trade.

“However, even with the current soft patch, the PMI is indicative of manufacturing helping drive a rebound in the annual pace of economic growth from the slowdown to 4.5 per cent seen in the first quarter, albeit likely remaining below 5 per cent in the second quarter.

“Encouragingly, manufacturers continued to see signs that the business outlook is brightening,” he said in the monthly report.

However, he said firms remain concerned about the effects of the US-China trade war, with more reporting heightened marketing and sales efforts to compensate.

The US-China trade war, which had been set to escalate with a fourth wave of retaliatory tariffs, appeared to thaw last week when US President Donald Trump met with China counterpart Xi Jinping outside the G20 summit to reach a ceasefire.

Chinese officials were quick to downplay, however, the likelihood of a swift return to conditions prior to the breakout of the tariff war between the two rival nations.

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