KUALA LUMPUR: The Malaysian Institute of Economic Research’s (MIER) released Tuesday its business condition survey for the third quarter of 2013, which pointed to a contraction in the manufacturing sector.
It said the sluggish outlook was expected to continue into the fourth quarter, on a quarterly basis.
According to MIER, its Business Condition Index, which tracks domestic manufacturing activities, gained 2.6 points on-year but fell 15.6 points from Q2 of 2013.
The decline was attributed to a drop in both the current and expected indices.
Its Current Index (CI) – comprising sales, production, new local orders, new exports orders, capital investment and capacity utilisation – declined 14.7 points to 91.8 points in Q3 from 106.5 in the previous quarter. At the same time, the Expectation Index (IE) – which is made up of expected production and expected export sales – also lost 12.6 points and 5.7 points respectively.
MIER said Q3 sales dropped slightly, as local orders plunged and overseas orders were “generally unexciting”.
Across sectors, most of the manufacturers such as paper and paper products, chemical, rubber, heavy machinery and transport saw overseas orders trending lower. Inventories were up, especially in electrical and electronics products.
Investment in new plants and equipment trended lower, as did capacity utilisation. Capacity utilisation was highest for heavy machinery and transport products.
The outlook on employment held steady, however, and job opportunities in the manufacturing sector were looking up for the quarter.
“The employment number sub-index of the BCI increased 52.2 points from 45.8 points. Although 65% of the respondents have kept employment intake unchanged, 20% have reportedly hired extra help,” the MIER survey said.
Also, wage pressures decreased and 71% of respondents opted to maintain prices.
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