KUALA LUMPUR: The seasonally adjusted S&P Global Malaysia manufacturing purchasing managers' Index (PMI) posted 49.7 in February, up from 48.7 in January, its highest since August, indicating business conditions are nearing stabilisation.
S&P Global Market Intelligence economist Usamah Bhatti said that February data indicated improving trends for the Malaysian manufacturing sector, although conditions remained generally challenging.
“Most encouragingly, firms were able to secure greater volumes of new work for the first time in four months; however, there were still reports that demand remained largely muted. As a result, production and employment were scaled back, though only marginally,” he said.
He added that cost inflation also remained subdued compared to the series average and was little-changed from that observed in January. This allowed firms to reduce selling prices for the second consecutive month.
“The outlook for the coming months appears brighter, as firms are hopeful that the renewed increase in new orders will be sustained and accelerate, leading to an eventual recovery in production levels,” Bhatti said.
S&P Global said the latest PMI reading aligns with modest growth in gross domestic product (GDP) for the first quarter of 2025, extending the manufacturing expansion seen in late 2024.
It noted that new orders rose for the first time since last October, with the fastest growth since May 2024. Some firms saw better demand, but overall client confidence remained weak.
Additionally, data suggested that the increase in overall new business partly reflected domestic sales growth, as new export orders declined for the third consecutive month, with sales especially muted in the Asia-Pacific region.
“Despite the expansion in order books, production levels at Malaysian manufacturers were scaled back for the ninth month in a row. The rate of moderation was only modest and the softest seen in six months. Goods producers continued to highlight subdued conditions,” S&P Global said.
It noted that a focus on completing outstanding business meant that backlogs of work moderated for the seventh consecutive month. The latest depletion was the most marked since March 2024.
Subdued operating conditions kept Malaysian manufacturers cautious on stockpiling, though inventory cuts slowed in February, and input sourcing improved slightly with minimal delays.
S&P Global said rising raw material costs and exchange rate fluctuations pushed input prices higher, though inflation remained modest. Meanwhile, firms slightly lowered selling prices for the second straight month.
“New order growth is expected to be sustained over the coming year, supporting optimism regarding the 12-month outlook for manufacturing production. The degree of positive sentiment was solid, reaching the highest level recorded in four months,” it added.
