Malaysia's manufacturing PMI up sharply to 51 in June

Chief business economist Chris Williamson said the Malaysian manufacturing sector showed encouraging signs of recovery in June.

KUALA LUMPUR: The headline IHS Markit Malaysia Manufacturing Purchasing Managers’ Index (PMI) rose sharply to 51.0 in June 2020 from 45.6 in May 2020, its highest since September 2018.

In a note on Tuesday, IHS Markit said this indicated an improvement in the health of Malaysia's goods-producing sector and stronger economic growth more generally.

Commenting on the latest results of the survey, chief business economist Chris Williamson said the Malaysian manufacturing sector showed encouraging signs of recovery in June.

"Output rose at a rate unsurpassed in the survey’s eight-year history as increasing numbers of firms reopened facilities or raising factory operating capacity after COVID-19-related disruptions.

"Such a rapid turnaround in production since the severe collapse in April bodes well for a v-shaped recovery, ” he said.

However, Williamson said a sustained recovery is by means assured, and growth could easily lose momentum after the initial rebound.

While business expectations continued to improve in June, confidence remained well below levels seen at the start of the year, in part reflecting worries about the impact of ongoing COVID-19 restrictions on demand, both at home and abroad.

"Weak export demand remains a particular concern, especially in terms of subdued consumer spending.

"For now though, the data are moving strongly in the right direction and, barring any second waves of infections, recovery is evident, ” he said.

According to IHS Markit, there were encouraging signs that demand conditions were beginning to stabilise in June, with the New Orders Index rising to a six-month high.

The re-opening of certain industries reportedly led new work intakes to improve. That said, overseas demand remained particularly fragile, weighing down total order book volumes.

"Although the rate of decline in new export sales has eased considerably since April, international market demand was reportedly subdued by the ongoing pandemic, ” it said.

Looking ahead, the manufacturing sector outlook improved once again in June.

"Business confidence strengthened to a four-month high as firms became increasingly confident that production would rise from its present levels in the year ahead.

"Optimism was linked to expectations of a recovery in economic activity, ” it said. - Bernama