Further signs of rapid recovery in Malaysia as factories keep up momentum

Malaysia’s manufacturing continued to outperform expectations in July. — Picture by Sayuti Zainudin
Malaysia’s manufacturing continued to outperform expectations in July. — Picture by Sayuti Zainudin

KUALA LUMPUR, Aug 3 — Malaysia’s manufacturing continued to outperform expectations in July to offer further indication that the country could be in for a V-shaped recovery from the Covid-19 pandemic.

According to the IHS Markit Malaysia Manufacturing Purchasing Managers Index (PMI), the country registered a score of 50.0 for July to beat estimates of 49.0.

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

In the previous month’s PMI, Malaysia registered a score of 51.0, up sharply from the 45.6 in May.

Noting the slowing expansion, IHS Markit chief business economist Chris Williamson said it was vital for the sector to maintain the momentum but cautioned that this may be more difficult due to deteriorating export demand.

“It will be important for demand to rise further in coming months to encourage more hiring and boost confidence,” Williamson said when commenting on the results released today.

“July saw job numbers fall at a slightly increased rate as firms grew slightly less optimistic about the year ahead, underscoring how producers are likely to remain cost-conscious and err towards risk aversion until the outlook for demand beyond the initial rebound from Covid-19 lockdowns becomes clearer.”

According to IHS Markit, local manufacturers continued to report optimism for the year ahead, with sentiments only dipping marginally since June.

It said this continued confidence despite sliding demand was due to the fact that many producers were still working on clearing backlogged orders at the moment.

In its June PMI, IHS Markit said the strong rebound indicated that Malaysia could experience a V-shaped recovery from the economic disruption caused by efforts to contain Covid-19 here.

However, it also cautioned that this could easily be derailed if, for instance, the country suffers another wave of infections.

Malaysian authorities have increasingly tightened the enforcement of standard operating procedures for the recovery movement control order after new Covid-19 infection clusters emerged across various parts of the country.

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