KUALA LUMPUR, Jan 2 — Local manufacturing activity rose to its highest since September 2018 in December of last year, according to the IHS Markit Malaysia Manufacturing Purchasing Managers Index (PMI).
In its report for the final month of 2019, IHS Markit said Malaysia’s PMI rose to 50.0 on the index, up from 49.5 in the previous month and hitting a 15-month high.
A PMI score under 50 denotes contraction while a score above 50 signals expansion.
Critically for Malaysia, IHS Markit’s extrapolation using the manufacturing data suggests that the country could beat this year’s economic growth target if the level is maintained.
“Malaysia’s manufacturers move into 2020 reporting increasingly brighter business conditions, having ended 2019 with their best performance for over a year,” Chris Williamson, chief business economist at IHS Markit, said.
“At current levels the PMI is indicative of manufacturing expanding at an annual rate of approximately 6 per cent and GDP growing by 5.5 per cent.”
Williamson also said the improved indicators during last year’s period of economic tumult has helped raise business optimism to the highest point in six years.
While he said that realising the predictions depended on negating uncertainty from ongoing trade wars, any good news on such matters was likely to spur optimism and appetite for growth following a dismal 2019.
The December result was also not the period’s only bright point for Malaysia. According to IHS Markit, the mean PMI over the fourth quarter of 2019 was the highest since the Q3 2018 following last year’s general election euphoria, suggesting accelerating growth.
Businesses also reported that fresh orders kept picking up in December, marking the fourth straight month of increases to reach the zenith of the year.
These included reports both of successful project tenders and greater sales to existing clients, IHS Markit said.
Malaysia has had its growth forecast for 2020 revised downwards by the World Bank, but the government has maintained its projection of 4.8 per cent for the full year.