KUALA LUMPUR, Sept 1 — The Malaysian manufacturing sector did not recover in August, although its contraction moderated compared to in July, according to a survey.
IHS Markit, reporting on its Malaysia Manufacturing Purchasing Managers’ Index (PMI), said today that production levels and new orders were facing “sustained reductions”, although the decline was at the softest rates in the past three months.
It attributed the loss to an increase in Covid-19 cases, saying the pandemic has “hampered output and sales”.
The lack of demand has also reportedly pushed manufacturers to scale down their workforces in August, with employers also noting a reduction in foreign work permits being issued, due to Covid-19 restrictions.
“Although marginal, the August decline means staffing levels have now fallen in four of the last five months,” it said.
However, IHS Markit said businesses were increasingly optimistic regarding their outlook for the year ahead, and were hoping that the end of the pandemic would drive a broad recovery in supply chains and demand.
IHS Markit said its Malaysia Manufacturing PMI rose from 40.1 in July to 43.4 in August. A score below 50 denotes contraction while a score above 50 signals expansion.
The firm said that while this indicated continued deterioration in the sector, it was still improved from the two preceding months.
IHS Markit chief business economist Chris Williamson said an easing of some Covid-19 lockdown measures helped take some of the pressures off Malaysian manufacturing in August.
“Conditions remain tough for producers, however, with order books continuing to decline, supply chain delays widely reported and raw material prices rising sharply again.
“Encouragingly, business expectations for the coming year improved during the month, as more companies grew optimistic that the worst of the pandemic has passed.
“Concerns over the spread of the Delta variant nevertheless meant the outlook remains more uncertain than earlier in the year, keeping a lid on the overall degree of optimism,” he said.
According to IHS Markit, its Malaysia Manufacturing PMI compiles responses from purchasing managers in a panel of around 400 manufacturers, with survey responses collected in the second half of each month.
