KUALA LUMPUR: The seasonally adjusted S&P Global Malaysia manufacturing purchasing managers’ index (PMI) dipped slightly to 49.7 in July from 49.9 in June, signalling a fractional moderation in the health of the sector.
“Malaysian manufacturers remained under pressure in July, as the latest PMI data signalled that the sector saw a slightly steeper moderation in operating conditions. New orders, output and employment all softened, with incoming new business falling for the first time in three months,” S&P Global Market Intelligence economist Usamah Bhatti said.
“According to panel members, the subdued environment was largely limited to the domestic economy, as new export orders rose for the fourth month in a row, and at the joint-fastest pace since April 2021. Firms also cited this improvement in demand as a key factor behind the renewed rise in outstanding business.
"Inflationary pressures remained prevalent among Malaysian manufacturers meanwhile, as input price inflation edged slightly up to reach the highest for eight months. This contributed to the strongest rise in output charges since September 2022."
S&P Global reported that new orders declined for the first time in three months due to weak demand. The reduction was only slight, however.
On the other hand, international markets saw growth for the fourth consecutive month in July, which firms often attributed to demand in the Asia and Oceania regions.
In line with the trend for new orders, production softened considerably for the first time in three months, though the reduction was only modest.
Concurrently, employment was scaled back for the first time in four months in July as firms noted the non-replacement of voluntary leavers.
Purchasing activity, stocks of inputs and inventories of finished goods were all scaled back at the start of the third quarter, though only stocks of purchases saw the rate of moderation quicken during the month.
Despite weaker demand for inputs, firms saw longer delivery times for the third month in a row during July. Lead times lengthened to the joint-largest degree since September 2022 amid reports of severe port congestion.
Meanwhile, the rate of input cost inflation ticked up slightly in July to reach an eight-month high amid higher raw material and transportation costs.
S&P said hopes of an improvement in demand were key to optimism regarding the 12-month outlook for output at the start of the third quarter.
“The overall level of confidence strengthened to the highest since March, though remained below the long-run average (56.3) amid concern regarding the timing of a domestic demand recovery,” it said.
