KUALA LUMPUR, May 2 — Malaysia’s seasonally adjusted manufacturing purchasing managers’ index (PMI) remain subdued, with the latest data signalling mixed trends at the start of the second quarter of the year.
In a statement today, financial analytics firm S&P Global Market Intelligence said as a result, leading firms had limited production and scaled back their purchasing activity, although there were some positive signs in relation to new export orders.
“Also positive was the trend in employment, with firms taking on additional staff for the fourth month running,” it said.
S&P Global Market Intelligence economics director Andrew Harker said that while the latest PMI data suggested that demand conditions remained subdued in the Malaysian manufacturing sector in April, the data was still consistent with reasonable growth in official numbers.
“Moreover, there were some positive signs emanating from the latest survey. Export demand ticked up, hopefully providing an early signal that the overall demand environment will start to strengthen soon. Firms also had more success in securing new staff members during the month,” he said in a statement.
“With price and supply pressures also having shown improvement, the sector is hopefully set for a strengthening of growth momentum as the quarter progresses.”
Meanwhile, suppliers’ delivery times continued to shorten, and the rate of input cost inflation remained muted, enabling firms to reduce their output prices as part of efforts to stimulate demand.
The seasonally adjusted Purchasing Managers’ Index (PMI) is unchanged at 48.8 as of April, signalling that business conditions remained challenging for firms.
That said, the index was at its joint-highest level since September last year, suggesting a tentative recovery in operating conditions since the turn of the year.
The latest PMI reading suggested that gross domestic product growth is running at a similar level to that seen in the final quarter of 2022, as well as modest year-on-year improvements in official industrial production data.
Manufacturers often noted that demand in the sector remained muted at the start of the second quarter, with some reports of customers reducing the size of their orders.
As a result, total new business moderated for the eighth consecutive month, and to a broadly similar extent to that seen in March. Demand conditions in international markets were more positive, with new export orders up fractionally following a nine-month sequence of softening.
With customer demand remaining subdued, manufacturers scaled back production, the ninth month running in which this has been the case.
“That said, the moderation was only slight and the least pronounced since August 2022,” it said.
Meanwhile, stocks of finished goods decreased amid the delivery of orders or their collection by customers. Companies reported success in securing additional staff members in April.
As a result, employment increased for the fourth successive month. The rate of job creation was modest but quickened to a seven-month high.
Higher workforce numbers, alongside subdued new orders, meant that firms were able to deplete backlogs of work again during the month.
In contrast to the trend in employment, purchasing activity continued to be scaled back as the muted picture for new business deterred firms from buying additional inputs.
There were further signs of raw material prices levelling off in April as input costs rose only slightly. The rate of inflation was broadly in line with the 34-month low posted in March.
With cost inflation muted, firms were able to offer discounts to customers to help provide a boost to demand. Selling prices ticked lower, ending a three-month sequence of inflation.
However, hopes that new orders will return to growth supported confidence that production will rise over the next 12 months, the statement added.
