KUALA LUMPUR, May 5 — Malaysia’s Manufacturing Purchasing Managers’ Index (PMI) plunged to 31.3 in April from 48.4 in March, as sentiment was pummeled by Covid-19 headwinds, a trend seen across AseanN and emerging market economies.

Public Investment Bank, in its note today, said the manufacturing sector suffered during the month of April as the movement control order (MCO) forced production either to shut down or operate well below full capacity.

“This was compounded by shortages of raw material amid a transportation system that was heavily curbed.

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“The MCO, as well as lockdowns here and also in overseas market have hurt demand. New orders have fallen sharply, dragged down by domestic and overseas clients that were forced to close operations,” it said.

However, there is a silver lining to it.

“The survey reported a modest decline in employment with 95 per cent of firms reporting unchanged workforce numbers. Price trends were also deflationary driven by cheaper raw material and other input costs, courtesy of a weak demand,” it said.

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On the outlook, the investment body said that the outlook remains challenging due to the uncertainty over the longevity of Covid-19 even though firms are generally positive on the outlook for the next 12 months.

It said although the headline index could recover in May, it is unlikely to rebound sharply, as some key overseas markets are still closed, especially Singapore.

“Singapore, which is our key trade partner and the second largest after China, is expected to remain closed until June 1, possibly weighing on our recovery prospects,” it said.

On the manufacturing outlook, it said that the sector may stage a recovery in the third quarter of this year, although output may still be below optimal due to the strict standard operating procedures, including social distancing.

“As this will be a new normal across Asean; headline PMI index may remain uninspiring for the rest of the year. The recovery period could be long and bumpy, as the Covid-19 pandemic is still a threat as long as the vaccine is not available,” it said. — Bernama