Malaysia Feb factory activity contracts slightly as new orders decline

Over the recent quarter, the rubber glove industry has weathered the worst, given the sharp deterioration in operational earnings per glove.

KUALA LUMPUR: Data from the Markit Malaysia Purchasing Managers' Index for February.

Readings above 50.0 signal an improvement in business conditions while ones below indicate deterioration.

DATA

FEB JAN DEC

49.9 50.5 49.9

CONTEXT

* A decline in new orders, reflecting weak demand, led the headline PMI index to show contraction, though at a marginal rate. The index was swung between expansion and contraction each month since November.

* Manufacturers' output rose for a seventh straight month in February on the back of improved economic conditions, but the rate of growth was small.

* New export orders, which expanded the previous three months, contracted slightly in February. Some respondents cited reduced demand from key export markets like Europe and the U.S.

* Purchasing activity fell for a third straight month, as input buying fell in line with lower new orders and subdued demand conditions.

* Malaysian firms faced higher input cost inflation than January's 15-month low, with greater cost pressures stemming from currency weakness relative to the U.S. dollar. Output prices expanded for a 16th straight month, though at the slowest pace in four months.

Aashna Dodhia, economist at IHS Markit, said:

"February data painted a mixed picture as manufacturing conditions stagnated across Malaysia. Output growth was accompanied with greater payroll numbers across the sector, but demand for Malaysian-produced goods at both home and from international markets fell slightly.

"On the price front, higher input costs placed further pressure on firms' margins as they were restricted in their ability to fully pass on higher cost burdens to price-sensitive clients."- Reuters