KUALA LUMPUR: The Business Conditions Index (BCI) posted a modest recovery of 25.3 points in the third quarter (Q3) of 2020, settling at 86.3 points compared with a major drop of 22.0 points in Q2, indicating a boost in manufacturers’ confidence level.
According to the Malaysian Institute of Economic Research’s (MIER) business conditions survey report, business sentiment remained cautious as the index was below the threshold level as it had been for seven consecutive quarters.
Nevertheless on year-on-year basis, the index expanded at a favourable rate of +17.2 points as compared to -39.7 points the previous year.
“It is a good sign for Malaysia as the nation has managed to slowly recover from the Covid-19 pandemic.
“This is in line with active Malaysian government interventions in the market, through programmes like Prihatin Rakyat Economic Stimulus Package (Prihatin) and National Economic Recovery Plan (Penjana), ” MIER said in the report.
Relative to the previous quarter, most BCI components showed a substantial improvement due to the rise in both domestic and export demand, which influenced sales.
“Consequently, production and capacity utilisation marked an increase.
“Additionally, there is a marginal increase in capital investment and this could be due to better prospect for business conditions in the near future, ” it said.
The report said a positive outlook was expected in the quarter ahead as the Expected Index (EI) had increased progressively by 15.2 points and settled at 99.7 points.
“The upward movement in the EI can be attributed to the positive reading in expecting domestic and export sales, production volume and employment compared with the previous quarter.
“Manufacturers kept on believing in the economic recovery for the next quarter. In particular, the expected production increased pronouncedly by 13.1 points from the previous quarter. The same goes for the expected export sales with a slight increase of 2.1 points from the preceding quarter.”
MIER’s report said a large number of manufacturers (60%) was expected to retain their current employees through Q4 of 2020 and more than half of them (51%) planned to retain the current domestic selling prices. — Bernama
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